[Federal Register Volume 82, Number 234 (Thursday, December 7, 2017)]
[Notices]
[Pages 57742-57750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26376]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Pick-Sloan Missouri Basin Program--Eastern Division--Rate Order 
No. WAPA-180

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of order concerning firm power, firm peaking power, and 
sale of surplus product formula rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-180 and Rate Schedules P-SED-F13, P-SED-FP13, and P-SED-
M1 for firm power service, firm peaking power service, and a new 
formula rate for sale of surplus products for the Western Area Power 
Administration (WAPA) Pick-Sloan Missouri Basin Program--Eastern 
Division (P-SMBP--ED) into effect on an interim basis (Provisional 
Formula Rates).

DATES: The Rate Schedules P-SED-F13, P-SED-FP13, and P-SED-M1 are 
effective on the first day of the first full billing period beginning 
on or after January 1, 2018, and will remain in effect through December 
31, 2022, pending confirmation and approval by Federal Energy 
Regulatory Commission (FERC) on a final basis or until superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Jody S. Sundsted, Acting Regional 
Manager, Upper Great Plains Region, Western Area Power Administration, 
2900 4th Avenue North, Billings, MT 59101-1266, telephone (406) 255-
2800, or Ms. Linda Cady-Hoffman, Rates Manager, Upper Great Plains 
Region, Western Area Power Administration, 2900 4th Avenue North, 
Billings, MT 59101-1266, telephone (406) 255-2920, email [email protected].

SUPPLEMENTARY INFORMATION: 

Firm Electric Service

    On December 2, 2014, the Deputy Secretary of Energy approved, on an 
interim basis, Rate Schedules P-SED-F12 and P-SED-FP12 under Rate Order 
No. WAPA-166 for the 5-year period beginning January 1, 2015, and 
ending December 31, 2019 (79 FR 72670-72677 (Dec. 8, 2014)).\1\ These 
rate schedules are formula-based, providing for adjustments to the 
Drought Adder component.\2\ On January 1, 2017, the Drought Adder 
component of the P-SMBP--ED effective rate schedule was adjusted 
downward, recognizing repayment of drought costs included in the 
Drought Adder component of the approved formula rates. Under Rate 
Schedule P-SED-F12 with adjusted Drought Adder component as of January 
1, 2017, the firm capacity charge is $6.50/kWmonth and the firm energy 
charge is 16.18 mills/kWh. Under Rate Schedule P-SED-FP12, the firm 
peaking capacity charge is $5.85/kWmonth. Firm peaking energy is 
normally returned. A firm peaking energy charge of 16.18 mills/kWh will 
be assessed in the event energy is not returned.
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    \1\ FERC confirmed and approved Rate Order WAPA-166 on a final 
basis on March 18, 2015, in Docket No. EF15-3-000. See United States 
Department of Energy, Western Area Power Administration (Pick-Sloan 
Missouri Basin Program--Eastern Division), 150 FERC ] 62,170.
    \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 64067 (November 14, 
2007). The Drought Adder was added as a component to the energy and 
capacity rates in Rate Order No. WAPA-135, which was approved by the 
Deputy Secretary on an interim basis on November 14, 2007 (72 FR 
64067). FERC confirmed and approved Rate Order WAPA-135 on a final 
basis on April 14, 2008, in Docket No. EF08-5031. See United States 
Department of Energy, Western Area Power Administration (Pick-Sloan 
Missouri Basin Program-Eastern Division), 123 FERC ] 62,048. WAPA 
reviews the Drought Adder component each September to determine if 
drought costs differ from those projected in the Power Repayment 
Study and whether an adjustment to the Drought Adder component is 
necessary. See 72 FR 64071. The Drought Adder component 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 64071.
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    Effective January 1, 2018, WAPA is adjusting the overall composite 
rate of the Pick-Sloan Missouri Basin Program, which is reflected in an 
adjustment to the formula-based charge components of the firm power 
rate schedules. The Drought Adder component of the firm power rate 
schedules will go down to zero and the Base component will be adjusted 
upward to reflect present costs attributed to the charge components. 
WAPA's Upper Great Plains Region (UGP) is removing the 5 percent 
voltage discount in the existing P-SMBP--ED firm power rate schedule P-
SED-F12 and removing the voltage discount from the firm power revenue 
requirement. The total annual revenue requirement for P-SMBP--ED is 
$230.1 million for firm power service and firm peaking power service. 
Under Rate Schedule P-SED-F13, the firm capacity charge is $5.25/
kWmonth and the firm energy charge is 13.27 mills/kWh. Under Rate 
Schedule P-SED-FP13, the firm peaking capacity charge is $4.75/kWmonth. 
Firm Peaking Energy is normally returned. A

[[Page 57743]]

Firm Peaking Energy charge of 13.27 mills/kWh will be assessed in the 
event energy is not returned.

Sale of Surplus Products

    In addition to the firm power and firm peaking power rate 
schedules, WAPA is implementing a new formula-based rate schedule, P-
SED-M1, applicable to the sale of surplus energy and capacity products; 
energy, reserves, regulation, and frequency response. If P-SMBP--ED 
surplus products are available, the charge for each product will be 
determined 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.

Legal Authority

    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 the Administrator of WAPA; (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. Federal rules (10 CFR part 903) 
govern DOE procedures for public participation in power rate 
adjustments.
    Under Delegation Order Nos. 00-037.00B and 00-001.00F and in 
compliance with 10 CFR part 903 and 18 CFR part 300, I hereby confirm, 
approve, and place Rate Order No. WAPA-180, which provides the formula 
rates for P-SMBP--ED firm power, firm peaking power, and sale of 
surplus products, into effect on an interim basis. The new Rate 
Schedules P-SED-F13, P-SED-FP13, and P-SED-M1 will be submitted to FERC 
for confirmation and approval on a final basis.

    Dated: November 30, 2017.
Dan Brouillette,
Deputy Secretary of Energy.

DEPARTMENT OF ENERGY

DEPUTY SECRETARY

    In the matter of: Western Area Power Administration
Rate Adjustment for the Pick-Sloan Missouri Basin Program--Eastern 
Division)

Rate Order No. WAPA-180
ORDER CONFIRMING, APPROVING, AND PLACING THE PICK-SLOAN MISSOURI BASIN 
PROGRAM--EASTERN DIVISION FIRM POWER SERVICE, FIRM PEAKING POWER 
SERVICE AND SALE OF SURPLUS PRODUCT FORMULA RATES INTO EFFECT ON AN 
INTERIM BASIS
    The firm power, firm peaking power, and sale of surplus product 
rates for the Pick-Sloan Missouri Basin Program--Eastern Division (P-
SMBP--ED) set forth in this order are 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 (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 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. 00-037.00B, effective November 19, 2016, 
the Secretary of Energy delegated: (1) the authority to develop power 
and transmission rates to the Administrator of Western Area Power 
Administration (WAPA); (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). Federal rules (10 CFR part 
903) govern DOE procedures for public participation in power rate 
adjustments.

Acronyms, Terms and Definitions

    As used in this Rate Order, the following acronyms, terms and 
definitions apply:
    Base: A fixed revenue requirement that includes O&M expense, 
investments and replacements, interest on investments and replacements, 
normal timing power purchase (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 Rate: The rate which sets forth the charges for capacity. 
It is expressed in dollars per kilowatt-month and applied to each 
kilowatt of the Contract Rate of Delivery (CROD).
    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 kilowatt-hour and used only for comparison purposes.
    Customer: An entity with a contract that is receiving firm electric 
service from WAPA.
    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. Electric energy is expressed in kilowatt-hours.
    Energy Charge: The charge under the rate schedule for energy. It is 
expressed in mills per kilowatt-hour and applied to each kilowatt-hour 
delivered to each Customer.
    Firm: A type of product and/or service available at the time 
requested by a Customer.
    FY: Fiscal year; October 1 to September 30.
    kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
    kWh: Kilowatt-hour--the electrical unit of energy that equals 1,000 
watts in 1 hour.
    kWmonth: Kilowatt-month the electrical unit of the monthly amount 
of capacity.
    LAP Loveland Area Projects
    mills/kWh: Mills per kilowatt-hour--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

[[Page 57744]]

time in an electrical circuit. Generally, it is expressed as a 
percentage.
    Preference: The provisions of Reclamation Law that require WAPA 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 Formula Rate: A formula rate confirmed, approved, and 
placed into effect on an interim basis by the Deputy Secretary of 
Energy.
    Ratesetting PRS: The Power Repayment Study used for the rate 
adjustment period.
    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 Formula Rate Schedules P-SED-F13, P-SED-FP13, and 
P-SED-M1 will take effect on the first day of the first full billing 
period beginning on or after January 1, 2018, and will remain in effect 
through December 31, 2022, pending approval by FERC on a final basis or 
until superseded.

Public Notice and Comment

    WAPA-UGP followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these rates and schedules. The steps WAPA took to involve 
interested parties in the rate process were:
    1. A Federal Register Notice, published on July 3, 2017 (82 FR 
30858) (Proposal FRN), announced the proposed rates for P-SMBP--ED and 
began the 90-day public consultation and comment period.
    2. On July 5, 2017, WAPA-UGP mailed letters to all P-SMBP--ED 
Preference Customers and interested parties transmitting the FRN 
published on July 3, 2017.
    3. On August 22, 2017, at 9 a.m. (MDT), WAPA held a public 
information forum at the Denver Embassy Suites, 7000 Yampa Street, 
Denver, Colorado. WAPA provided updates to the proposed firm power 
rates and sale of surplus products for both P-SMBP--ED and Loveland 
Area Projects (LAP). WAPA also answered questions and gave notice that 
more information was available in the customer rate brochure.
    4. On August 22, 2017, at 11 a.m. (MDT), following the public 
information forum, at the same location, a public comment forum was 
held, to provide an opportunity for customers and other interested 
parties to comment for the record. No oral or written comments were 
received at this forum.
    5. On August 23, 2017, at 9 a.m. (CDT), WAPA held a public 
information forum at the Holiday Inn, 100 West 8th Street, Sioux Falls, 
South Dakota. WAPA provided updates to the proposed firm power rates 
and sale of surplus products for both the P-SMBP--ED and LAP. WAPA also 
answered questions and gave notice that more information was available 
in the customer rate brochure.
    6. On August 23, 2017, at 11 a.m. (CDT), following the public 
information forum, and at the same location, a public comment forum was 
held. The comment forum gave the public an opportunity to comment for 
the record. Two oral comments were received at this forum.
    7. WAPA provided a Web site that contains all dates, customer 
letters, presentations, FRNs, customer rate brochure, and other 
information about this rate process. The Web site is located at https://www.wapa.gov/regions/UGP/rates/Pages/2018-firm-rate-adjustment.aspx.
    8. During the 90-day consultation and comment period, which ended 
October 2, 2017, WAPA received two oral comments (at the August 23 
public comment forum) and two comment letters. The comments and WAPA's 
responses are addressed below. All comments have been considered in the 
preparation of this Rate Order.

Two representatives of the following organizations made oral comments

Mid-West Electric Consumers Association, Colorado
Missouri River Energy Services, South Dakota

Written comments were received from the following interested parties

Marshall Municipal Utilities, Minnesota
Missouri River Energy Services, South Dakota

Project Description

    The Pick-Sloan Missouri Basin Program (P-SMBP), originally the 
Missouri River Basin Project, was authorized by Congress in section 9 
of the Flood Control Act of 1944 of December 22, 1944 (Pub. L. 534, 58 
Stat. 887, 891). 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, 
Riverton, and Shoshone Projects were combined with the P-SMBP in 1954, 
followed by the North Platte Project in 1959. These projects were 
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 Project was reauthorized as a unit of P-SMBP in 1970.
    The P-SMBP power is marketed by two Regions. The UGP Region, with a 
regional office in Billings, Montana, markets the Eastern Division (P-
SMBP--ED) power to approximately 340 customers. The Rocky Mountain 
Region (RMR), with a regional office in Loveland, Colorado, markets the 
Western Division (P-SMBP--WD) power through LAP to approximately 75 
customers.
    The adjustment to the LAP rate is a separate formal rate process, 
which is documented in Rate Order No. WAPA-179. Rate Order No. WAPA-179 
is also scheduled to go into effect on the first day of the first full 
billing period on or after January 1, 2018. The P-SMBP--WD revenue 
requirement is incorporated into the LAP rate, along with the revenue 
requirement for the Fryingpan-Arkansas Project.

Power Repayment Study--Firm Power Rate

    WAPA prepares a PRS each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the P-SMBP. Repayment criteria is based on WAPA's applicable laws and 
legislation, as well as policies including DOE Order RA 6120.2. To meet 
the Cost Recovery Criteria outlined in DOE Order RA 6120.2, a revised 
study and rate adjustment has been developed to demonstrate that 
sufficient revenues will be collected under Provisional Formula Rates 
to meet future obligations.

[[Page 57745]]

    With the removal of the voltage discount taken into account, the 
total annual revenue requirement for P-SMBP--ED is $230.1 million for 
firm power service and firm peaking power service. The revenue 
requirement and composite rates for P-SMBP--ED firm power and firm 
peaking power are being reduced, as indicated in Table 1:

                         Table 1--Comparison of Revenue Requirements and Composite Rates
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                                                                     Existing       Provisional
                                                                   requirements    requirements
                                                                    (January 1,     (January 1,   Percent change
                                                                       2017)           2018)
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P-SMBP--ED Revenue Requirement (millions $).....................          $282.7      $230.1 \1\            -19%
P-SMBP--ED Composite Rate (mills/kWh)...........................           28.25           24.00             -15
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\1\ Voltage discount removed.

    Under the existing rate methodology, rates for P-SMBP--ED firm 
power service and firm peaking power service are designed to recover an 
annual revenue requirement that includes power investment repayment, 
aid to irrigation repayment, interest expense, purchase power, O&M, and 
other expenses within the allowable period. The annual revenue 
requirement continues to be allocated equally between capacity and 
energy.

Existing and Provisional Formula Rates

    The existing Rate Schedules P-SED-P12 and P-SED-FP12 and 
provisional Rate Schedules P-SED-P13 and P-SED-FP13 continue to be 
formula-based, with Base and Drought Adder components, and provide for 
an incremental upward adjustment to the Drought Adder component up to 2 
mills/kwh. An incremental increase to the Drought Adder greater than 2 
mills/kWh requires a public process. The Drought Adder may be adjusted 
downward pursuant to the formula, by using the approved annual Drought 
Adder adjustment process. A comparison of the existing and Provisional 
Formula Rates for P-SMBP--ED firm electric service is listed in Table 
2:

                          Table 2--Comparison of Existing and Provisional Formula Rates
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                                                                     Existing
                                                                   charges under    Provisional
                                                                   P-SED-F12/ P-   charges under
                                                                   SED-FP12 with   P-SED-F13/ P-
                       Firm power service                            modified     SED-FP13 as of  Percent change
                                                                   drought adder    January 1,
                                                                   as of January       2018
                                                                      1, 2017
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Firm Capacity ($/kW month)......................................           $6.50           $5.25             -19
Firm Energy (mills/kWh).........................................           16.18           13.27             -18
Firm Peaking Capacity ($/kW month)..............................           $5.85           $4.75             -19
Firm Peaking Energy (mills/kWh) \1\.............................           16.18           13.27             -18
----------------------------------------------------------------------------------------------------------------
\1\ Firm Peaking Energy is normally returned. This charge will be assessed in the event Firm Peaking Energy is
  not returned.

    Under the new formula-based Rate Schedule P-SED-M1, the Provisional 
Formula Rate will consist of a charge for products listed in the rate 
schedule that will be determined at the time of the sale based on 
market rates, plus administrative costs.

Certification of Rates

    WAPA's Administrator certified that the Provisional Formula Rates 
for P-SMBP--ED firm power, firm peaking power, and sale of surplus 
product rates under Rate Schedules P-SED-F13, P-SED-FP13, and P-SED-M1 
are at the lowest possible rates consistent with sound business 
principles. The Provisional Formula Rates were developed following 
administrative policies and applicable laws.

P-SMBP--ED Firm Power Rate Discussion

    According to Reclamation Law, WAPA is required to establish power 
rates sufficient to recover O&M, purchased power and interest expenses, 
and repay power investment and irrigation aid. The P-SMBP--ED firm 
power and firm peaking power Base and Drought Adder components are 
updated to represent present costs. As a part of the existing and 
provisional 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 power 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 PRS, and allow WAPA to be more responsive to changes 
caused by drought-related expenses. WAPA will continue to charge and 
bill its Preference Customers firm power service and firm peaking power 
service rates for energy and capacity, which are the sum of the Base 
and Drought Adder components.
    Under Rate Schedules P-SED-F13 and P-SED-FP13, WAPA will continue 
to identify its firm power revenue requirement using Base and Drought 
Adder components. The Base component is a fixed revenue requirement 
that includes annual O&M expenses, investment repayment and associated 
interest, normal timing power purchases, and transmission costs. Normal 
timing power purchases

[[Page 57746]]

are due to operational constraints (e.g., management of endangered 
species habitat, water quality, navigation, etc.) and are not 
associated with drought. WAPA cannot adjust the Base component without 
a public process.
    The Drought Adder component is a formula-based revenue requirement 
that includes costs attributable to drought conditions within P-SMBP. 
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 WAPA's drought debt within 10 years from the time the debt was 
incurred, using balloon-payment methodology. For example, the drought 
debt incurred by WAPA in FY 2009 is required to 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. Both the Base 
and Drought Adder components recover portions of the firm power revenue 
requirement and firm peaking power revenue necessary to equal the P-
SMBP--ED revenue requirement. Under this Provisional Rate, the P-SMBP--
ED annual revenue requirement equals $230.1 million and is comprised of 
a Base revenue requirement of $230.1 million plus a Drought Adder 
revenue requirement of $0. A comparison of the existing and provisional 
charge components is listed in Table 3.

                                                    Table 3--Summary of P-SMBP--ED Charge Components
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                                           Existing charges under rate schedules P-SED-   Provisional charges under rate schedules P-SED-     Change
                                             F12 and P-SED-FP12 with  modified drought       F13 and P-SED-FP13 as of January 1, 2018    ---------------
                                                   adder as of  January 1, 2017          ------------------------------------------------
                                         ------------------------------------------------
                                               Base        Drought Adder                       Base        Drought Adder   Total charge         (%)
                                             component       component     Total charge      component       component
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Capacity                                      $4.90           $1.60           $6.50           $5.25           $0.00           $5.25            -19%
 (/kWmonth).............................
Firm Energy (mills/kWh).................           12.33            3.85           16.18           13.27            0.00           13.27            -18%
Firm Peaking Capacity ($/kWmonth).......           $4.45           $1.40           $5.85           $4.75           $0.00           $4.75            -19%
Firm Peaking Energy (mills/kWh) \1\.....           12.33            3.85           16.18           13.27            0.00           13.27            -18%
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Firm Peaking Energy is normally returned. This charge will be assessed in the event Firm Peaking Energy is not returned.

    WAPA reviews its firm power service rates annually. WAPA will 
review the Base and Drought Adder components after the annual PRS is 
completed, generally in the first quarter of the calendar year. If an 
adjustment to the Base component is necessary or if an incremental 
upward adjustment to the Drought Adder component greater than the 
equivalent of 2 mills/kWh to the PRS Composite Rate is necessary, WAPA 
will initiate a public process following 10 CFR part 903 before making 
an adjustment.
    In accordance with the approved Drought Adder adjustment process, 
WAPA will review the Drought Adder component annually in early summer 
to determine if drought costs differ from those projected in the PRS. 
In October, WAPA will determine if a change to the Drought Adder 
component is necessary, either incremental or decremental. Adjustment 
to the Drought Adder component, up to 2 mills/kWh, will be implemented 
in the following 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. Implementing the Drought Adder component adjustment on 
January 1 of each year will help keep the drought deficits from 
escalating as quickly, will lower the interest expense due to drought 
deficits, will demonstrate responsible deficit management, and will 
provide prompt drought deficit repayments.

Statement of Revenue and Related Expenses

    The following Table 4 provides a summary of projected revenue and 
expense data for the P-SMBP, including both the Eastern and Western 
Division's firm electric service revenue requirements, through the 5-
year provisional rate approval period. The firm power rates for Eastern 
and Western Divisions have been developed with the following revenues 
and expenses for the P-SMBP:

           Table 4--P-SMBP Comparison of 5-Year Rate Period (FY 2018-2022) Total Revenues and Expenses
----------------------------------------------------------------------------------------------------------------
                                                           Existing Rate     Provisional Rate
                                                               ($000)             ($000)       Difference ($000)
----------------------------------------------------------------------------------------------------------------
Total Revenues\1\......................................         $2,679,973         $2,644,825          ($35,148)
----------------------------------------------------------------------------------------------------------------
Revenue Distribution
Expenses:
O&M....................................................         $1,082,969         $1,158,866            $75,897
Purchased Power........................................            164,049            124,796           (39,253)
Interest...............................................            561,528            560,257            (1,271)
Transmission\1\........................................             64,072            460,982            396,910
----------------------------------------------------------------------------------------------------------------
    Total Expenses.....................................         $1,872,618         $2,304,901           $432,283
 

[[Page 57747]]

 
Principal Payments:
Capitalized Expenses (Deficits) \2\....................           $345,006            $42,325         ($302,681)
Original Project and Additions \2\.....................            401,193            179,017          (222,176)
Replacements \2\.......................................             61,156             72,864             11,708
Irrigation Aid.........................................                  0             45,718             45,718
                                                        --------------------------------------------------------
    Total Principal Payments...........................           $807,355           $339,924         ($467,431)
                                                        --------------------------------------------------------
    Total Revenue Distribution.........................         $2,679,973         $2,644,825          ($35,148)
----------------------------------------------------------------------------------------------------------------
\1\ Transmission increase is a result of accounting treatment of transmission expense and transmission revenue
  due to WAPA-UPG joining the Southwest Power Pool (SPP).
\2\ Due to historic drought conditions, revenues generated in the cost evaluation period are applied toward
  repayment of deferred annual expenses rather than repayment of project additions and replacements. The
  outstanding deferred of amount $42.3 million is projected to be repaid in 2018, a year ahead of its due date.

Sale of Surplus Products Discussion

    WAPA is also implementing a new formula rate for the sale of 
surplus products under Rate Schedule P-SED-M1. This new rate schedule 
allows for the sale of generation and generation-related products in 
excess of WAPA's P-SMBP--ED firm power obligations at market rates. P-
SED-M1 is a new formula-based rate schedule, applicable to the sale of 
surplus energy and capacity products. The schedule includes reserves, 
regulation, frequency response, and energy. If WAPA UGP surplus 
products are available, the charge is determined 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. WAPA is placing Rate Schedule 
P-SED-M1 into effect for the 5-year period beginning January 1, 2018, 
through December 31, 2022.

Basis for Rate Development

    WAPA is lowering the overall charges for firm power service and 
firm peaking power service by 19 percent, by reducing the Drought Adder 
component to zero, increasing the Base component, and removing the 
voltage discount. The Provisional Formula Rates under Rate Schedules P-
SED-F13 and P-SED-FP13 will provide sufficient revenue to pay all 
annual costs, including interest expense, and repay investments within 
the allowable periods.

Comments

    WAPA received two comment letters and two oral comments 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.
    A. Comment: One customer expressed support of the proposed rate 
adjustment as described in the FRN for Rate Order No. WAPA-180. The 
customer is aware that WAPA intends to lower the Drought Adder to zero 
and increase the Base component due to inflationary pressures. The 
customer also expressed support of removing the voltage discount. The 
customer commended WAPA on paying off the $843 million in drought debt 
as a significant achievement. The customer acknowledged much has been 
learned about the risks of power supply management through drought 
periods. The customer encouraged WAPA to work towards implementing a 
purchase power and wheeling strategy for WAPA's unobligated balances to 
help manage such risks in the future.
    Response: This rate reduction rebalances the Base and Drought Adder 
components. WAPA has also determined that the voltage discount has 
served its purpose and now is no longer needed. In its nearly 70 years 
of application, the original intent of reimbursing customers for 
relieving the BOR and then WAPA of transmission facility construction 
costs has been met. The purchase power and wheeling strategy, as well 
as the use of unobligated balances, are not directly related to this 
rate action. WAPA will, however, continue to complete an annual Drought 
Adder review that allows WAPA to be more responsive to rate adjustments 
driven by drought periods. WAPA is committed to continuing to implement 
its purchase power and wheeling strategy and use of unobligated 
balances in an open and transparent manner.
    B. Comment: Multiple customer representatives supported the rate 
adjustment as proposed, and emphasized the need for continued cost 
control regarding the Base component.
    Response: WAPA is committed to keeping the power rates at the 
lowest possible rates while maintaining sound business principles.

Availability of Information

    Information about this rate adjustment, including the customer rate 
brochure, PRS, comments, letters, memorandums, and other supporting 
materials that were used to develop the Provisional Formula Rates, is 
be available for inspection and copying at the Upper Great Plains 
Regional Office, located at 2900 4th Avenue North, 6th Floor, Billings, 
Montana. Many of these documents are also available on WAPA's Web site 
under the ``2018 Firm Rate Adjustment'' section located at https://www.wapa.gov/regions/UGP/rates/Pages/2018-firm-rate-adjustment.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 
has determined this action is categorically excluded from preparing an 
environmental assessment or an environmental impact statement. A copy 
of the categorical exclusion determination is available on WAPA's Web 
site at http://www.wapa.gov/regions/UGP/Environment/Documents/RateOrderWAPA-180.pdf.

[[Page 57748]]

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.

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 January 1, 2018, Rate Schedules P-SED-F13, 
P-SED-FP13, and P-SED-M1 for the Pick-Sloan Missouri Basin Program--
Eastern Division Project of the Western Area Power Administration. 
These rate schedules shall remain in effect on an interim basis, 
pending Federal Energy Regulatory Commission's confirmation and 
approval of the rate schedules or substitute rates on a final basis 
through December 31, 2022, or until superseded.

    Dated: November 30, 2017

Dan Brouillette
Deputy Secretary of Energy

Rate Schedule P-SED-F13

(Supersedes Schedule P-SED-F12)

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION

UPPER GREAT PLAINS REGION

Pick-Sloan Missouri Basin Program--Eastern Division

FIRM POWER SERVICE

(Approved Under Rate Order No. WAPA-180)

Effective

    The first day of the first full billing period beginning on or 
after January 1, 2018, through December 31, 2022, or until superseded 
by another rate schedule, whichever occurs earlier.

Available

    Within the marketing area served by the Eastern Division of the 
Pick-Sloan Missouri Basin Program; within Montana, North Dakota, South 
Dakota, Minnesota, Iowa, and Nebraska.

Applicable

    To the power and energy delivered to customers as firm power 
service.

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, 2018, under the Rate:
    CAPACITY CHARGE: $5.25 for each kilowatt per month (kWmo) of 
billing capacity.
    ENERGY CHARGE: 13.27 mills for each kilowatt-hour (kWh) for all 
energy delivered as firm power service.
    BILLING CAPACITY: The billing capacity will be as defined by the 
power sales contract.
    Charge Components
    Base Component: A fixed revenue requirement that includes operation 
and maintenance expense, investments and replacements, interest on 
investments and replacements, normal timing purchase power (purchases 
due to operational constraints, not associated with drought), and 
transmission costs. Any proposed change to the Base component will 
require a public process.
[GRAPHIC] [TIFF OMITTED] TN07DE17.001

    Drought Adder Component: A formula-based revenue requirement that 
includes future purchase power expense above timing purchases, previous 
purchase power drought deficits, and interest on the purchase power 
drought deficits. The formulas, along with the charges under the 
formulas as of January 1, 2018, are:
[GRAPHIC] [TIFF OMITTED] TN07DE17.002

    Annual Drought Adder Adjustment Process:
    The Drought Adder 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 Power Repayment Study (PRS) composite 
rate. Any planned 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 annual review process is initiated in early summer when WAPA 
reviews the Drought Adder component and provides notice of any 
estimated change to the Drought Adder component charge under the 
formula. In October, WAPA will make a final determination of any change 
to the Drought Adder component charge, either incremental or 
decremental. If a Drought Adder component change is required, a 
modified Drought Adder revenue requirement and the associated charges 
will become effective the following January 1 and will be identified in 
a Drought Adder modification update. WAPA will inform customers of 
updates

[[Page 57749]]

by letter and post updates to WAPA's external Web site.
    Adjustments:
    For Billing of Unauthorized Overruns:
    For each billing period in which there is a contract violation 
involving an unauthorized overrun of the contractual firm power and/or 
energy obligations, such overrun shall be billed at 10 times the 
formula rate.
    For Power Factor:
    None. Customers will be required to maintain a power factor at the 
point of delivery between 95-percent lagging and 95-percent leading.
Rate Schedule P-SED-FP13
(Supersedes Schedule P-SED-FP12)

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION

UPPER GREAT PLAINS REGION

Pick-Sloan Missouri Basin Program--Eastern Division

FIRM PEAKING POWER SERVICE

(Approved Under Rate Order No. WAPA-180)

Effective:

    The first day of the first full billing period beginning on or 
after January 1, 2018, through December 31, 2022, or until superseded 
by another rate schedule, whichever occurs earlier.

Available:

    Within the marketing area served by the Eastern Division of the 
Pick-Sloan Missouri Basin Program; within Montana, North Dakota, South 
Dakota, Minnesota, Iowa, and Nebraska.

Applicable:

    To the power sold to customers as firm peaking power service.

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, 2018, under the Rate:
    CAPACITY CHARGE:
    $4.75 for each kilowatt per month (kWmo) of the effective contract 
rate of delivery for peaking power or the maximum amount scheduled, 
whichever is greater.
    ENERGY CHARGE:
    13.27 mills for each kilowatt-hour (kWh) for all energy scheduled 
for delivery without return.
    Charge Components:
    Base Component: A fixed revenue requirement that includes operation 
and maintenance expense, investments and replacements, interest on 
investments and replacements, normal timing purchase power (purchases 
due to operational constraints, not associated with drought), and 
transmission costs. Any proposed change to the Base component will 
require a public process.
[GRAPHIC] [TIFF OMITTED] TN07DE17.005

    Drought Adder Component: 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. The formulas, along with the charges under the 
formulas as of January 1, 2018, are:
[GRAPHIC] [TIFF OMITTED] TN07DE17.006

    Annual Drought Adder Adjustment Process:
    The Drought Adder 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 Power Repayment Study (PRS) composite 
rate. Any planned 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 annual review process is initiated in early summer when WAPA 
reviews the Drought Adder component and provides notice of any 
estimated change to the Drought Adder component charge under the 
formula. In October, WAPA will make a final determination of any change 
to the Drought Adder component charge, either incremental or 
decremental. If a Drought Adder component change is required, a 
modified Drought Adder revenue requirement and the associated charges 
will become effective the following January 1 and will be identified in 
a Drought Adder modification update. WAPA will inform customers of 
updates by letter and post updates to WAPA's external Web site.
    BILLING CAPACITY:
    The billing capacity will be the greater of (1) the highest 30-
minute integrated capacity measured during the month up to, but not in 
excess of, the delivery obligation under the power sales contract, or 
(2) the contract rate of delivery.
    Adjustments:
    Billing for Unauthorized Overruns:
    For each billing period in which there is a contract violation 
involving an unauthorized overrun of the contractual obligation for 
peaking capacity and/or energy, such overrun shall be billed at 10 
times the above rate.
Rate Schedule P-SED-M1

[[Page 57750]]

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION

UPPER GREAT PLAINS REGION

PICK-SLOAN MISSOURI BASIN PROGRAM--EASTERN DIVISION

SALE OF SURPLUS PRODUCTS

(Approved Under Rate Order No. WAPA-180)

Effective:

    The first day of the first full billing period beginning on or 
after January 1, 2018, through December 31, 2022, or until superseded 
by another rate schedule, whichever occurs earlier.

Applicable:

    This rate schedule applies to Eastern Division of the Pick-Sloan 
Missouri Basin Program marketing and is applicable to the sale of the 
following P-SMBP--ED surplus energy and capacity products; energy, 
frequency response, regulation, and reserves. If any P-SMBP--ED surplus 
energy and capacity products are available, UGP can make the product(s) 
available for sale, providing entities enter into a separate 
agreement(s) with UGP Marketing Office which will specify the terms of 
sale(s).

Formula Rate:

    The charge for each product is determined at the time of the sale 
based on market rates, plus administrative costs. The customer will be 
responsible for acquiring transmission services necessary to deliver 
the product(s), for which a separate charge may be incurred.

[FR Doc. 2017-26376 Filed 12-6-17; 8:45 am]
 BILLING CODE 6450-01-P