[Federal Register Volume 87, Number 101 (Wednesday, May 25, 2022)]
[Notices]
[Pages 31876-31878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11029]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects-Rate Order No. WAPA-202

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed firm electric service and sale of surplus 
products formula rates.

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SUMMARY: The Rocky Mountain Region (RMR) of the Western Area Power 
Administration (WAPA) proposes revised formula rates for the Loveland 
Area Projects (LAP) firm electric service and sale of surplus products. 
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. The 
existing formula rates for these services, under Rate Schedules L-F11 
and L-M2, expire on December 31, 2022. RMR is proposing to update the 
formula rates for firm electric service under Rate Schedule L-F12 and 
sale of surplus products under Rate Schedule L-M3, effective January 1, 
2023, through December 31, 2027.

DATES: A consultation and comment period will begin May 25, 2022 and 
end August 23, 2022. RMR will present a detailed explanation of the 
proposed LAP formula rates and other modifications at a public 
information forum that will be held on June 15, 2022, at 8:30 a.m. MDT 
to no later than 10:30 a.m. MDT. RMR will host a public comment forum 
on June 29, 2022, at 11:00 a.m. MDT to no later than noon MDT.
    The public information forum and the public comment forum will be 
conducted via WebEx. Instructions for participating in the forums will 
be posted on RMR's website at least 14 days prior to the public 
information and comment forums at: www.wapa.gov/regions/RM/rates/Pages/
2023-Rate-Adjustment_-Firm-Power.aspx.
    RMR will accept comments any time during the consultation and 
comment period.

ADDRESSES: Written comments and requests to be informed of Federal 
Energy Regulatory Commission (FERC) actions concerning the proposed 
formula rates submitted by RMR to FERC for approval should be sent to: 
Barton V. Barnhart, Regional Manager, Rocky Mountain Region, Western 
Area Power Administration, 5555 East Crossroads Boulevard, Loveland, CO 
80538-8986, or email [email protected]. RMR will post information 
about the proposed formula rates and written comments received to its 
website at: www.wapa.gov/regions/RM/rates/Pages/2023-Rate-Adjustment_-
Firm-Power.aspx.

FOR FURTHER INFORMATION CONTACT: Sheila D. Cook, Rates Manager, Rocky 
Mountain Region, Western Area Power Administration, 5555 East 
Crossroads Boulevard, Loveland, CO 80538-8986, telephone (970) 685-9562 
or email [email protected] or [email protected].

SUPPLEMENTARY INFORMATION: On May 24, 2018, FERC confirmed and approved 
Rate Schedule L-F11 and Rate Schedule L-M2, under Rate Order No. WAPA-
179, on a final basis through December 31, 2022.\1\ These schedules 
apply to firm electric service and the sale of surplus products.
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    \1\ Order Confirming and Approving Rate Schedules on a Final 
Basis, FERC Docket No. EF18-3-000, 163 FERC ] 62,115 (2018).
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    RMR intends the proposed formula rates to go into effect January 1, 
2023. The proposed formula rates would remain in effect until December 
31, 2027, or until WAPA supersedes or changes the formula rates through 
another public rate process pursuant to 10 CFR part 903, whichever 
occurs first.
    The proposed formula rates would provide sufficient revenue to 
recover annual operation, maintenance, and replacement (OM&R) expenses, 
interest expense, irrigation assistance, and capital repayment 
requirements while ensuring repayment of the project within the cost 
recovery criteria set forth in Department of Energy (DOE) Order RA 
6120.2. For more information on the proposed rates, please see the 
customer brochure located on RMR's website at: www.wapa.gov/regions/RM/
rates/Pages/2023-Rate-Adjustment_-Firm-Power.aspx.

[[Page 31877]]

Firm Electric Service

    The P-SMBP and the Fry-Ark Fiscal Year 2021 Power Repayment Studies 
(PRSs) revenue requirements and current water conditions are the 
determining factors for this proposed rate adjustment.
    The base component costs for the P-SMBP have increased primarily 
due to: (1) Increased OM&R from WAPA and the generating agencies; (2) 
increased purchase power, including during the severe winter weather 
event in February 2021 (Winter Storm Uri); (3) pricing volatility; and 
(4) the loss of certain balancing authority revenues for services that 
WAPA no longer provides after joining the Western Energy Imbalance 
Service Market. Winter Storm Uri was not a water or generation issue; 
therefore, its costs only impact the base component.
    The base component costs for the Fry-Ark have increased primarily 
due to: (1) Increased OM&R from both WAPA and the Bureau of Reclamation 
(Reclamation); (2) increased transmission and ancillary services costs; 
and (3) changes in costs related to Reclamation's Mount Elbert 
Rehabilitation project. Increased purchase power and price volatility 
are also causing upward pressure.
    The driver behind the P-SMBP drought adder component increase is 
the Army Corps of Engineers Annual Operating Plan projecting less than 
average generation for the next several years in the P-SMBP mainstem 
dams. Uncertainties with water inflows, hydro generation, and 
replacement energy prices continue to pose potential risks for meeting 
firm power contractual commitments.
    The net effect of these adjustments to the base and drought adder 
components results in an overall increase to the LAP rate. A comparison 
of the current and proposed revenue requirements is shown in Table 1:

                          Table 1--Summary of Current and Proposed Revenue Requirements
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                                                                   Current under  Proposed under
                                                                    L-F11 as of     L-F12 as of
                      Firm electric service                         January 1,      January 1,    Percent change
                                                                     2018 (in        2023 (in
                                                                    million $)      million $)
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LAP Revenue Requirement.........................................            64.1            74.7            16.5
Pick-Sloan--WD \1\..............................................            50.8            58.6            15.4
Fry-Ark.........................................................            13.3            16.1            21.1
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\1\ Additional information on the overall P-SMBP PRS and charge components can be found under Rate Order No.
  WAPA-203 and on WAPA's Upper Great Plains Region's website at: www.wapa.gov/regions/UGP/Rates/Pages/2023-firm-rate-adjustment.aspx.

    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, OM&R, and 
other expenses within the allowable period. The annual revenue 
requirement continues to be allocated equally between capacity and 
energy.
    A comparison of the current and proposed rates is shown in Table 2:

                                 Table 2--Summary of Current and Proposed Rates
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                                                                   Current under  Proposed under
                                                                    L-F11 as of     L-F12 as of
                      Firm electric service                         January 1,      January 1,    Percent change
                                                                       2018            2023
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LAP Composite Rate..............................................           31.44           36.61            16.4
Firm Capacity Rate ($/kilowatt-month)...........................           $4.12           $4.80            16.5
Firm Energy Rate (mills/kilowatt-hour)..........................           15.72           18.31            16.5
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    As a part of the current and proposed rate schedules, RMR provides 
for a formula-based adjustment of the drought adder component, with an 
annual increase of up to 2 mills per kilowatt-hour (kWh) each year. The 
2 mills/kWh cap places a limit on the amount the drought adder 
component can be adjusted upward relative to associated drought costs 
included in 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 RMR in the 
presentation of future impacts of droughts, demonstrate repayment of 
drought-related costs in the PRSs, and allow RMR to be more responsive 
to changes caused by drought-related expenses. RMR 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.
    The proposed adjustment updates the base component with present 
costs from a revenue requirement of $64.1 million to $67.8 million and 
increases the drought adder component revenue requirement. For rate 
year 2023 the drought adder revenue requirement increases from zero to 
$6.8 million.\2\
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    \2\ The exact values are $64,143,960, $67,839,200, and 
$6,838,720 respectively.
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    A comparison of the current and proposed components is shown in 
Table 3:

[[Page 31878]]



                                    Table 3--Summary of LAP Charge Components
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                                  Current charges under rate          Proposed charges under rate
                                schedule L-F11 as of January 1,     schedule L-F12 as of January 1,
                                             2018                                2023
                             ------------------------------------------------------------------------   Percent
                                            Drought                             Drought                 change
                                 Base        adder       Total       Base        adder       Total
                               component   component    charge     component   component    charge
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Firm Capacity ($/kilowatt-         $4.12          $0       $4.12       $4.36       $0.44       $4.80        16.5
 month).....................
Firm Energy (mills/kWh).....       15.72           0       15.72       16.63        1.68       18.31        16.5
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Sale of Surplus Products

    The Sale of Surplus Products 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 proposed Rate Schedule, L-M3, 
continues to allow for the sale of energy, frequency response, 
regulation, and reserves.

Legal Authority

    Existing DOE procedures for public participation in power and 
transmission rate adjustments (10 CFR part 903) were published on 
September 18, 1985, and February 21, 2019.\3\ The proposed action is a 
major rate adjustment, as defined by 10 CFR 903.2(d). In accordance 
with 10 CFR 903.15(a) and 10 CFR 903.16(a), RMR will hold public 
information and public comment forums for this rate adjustment. RMR 
will review and consider all timely public comments at the conclusion 
of the consultation and comment period and adjust the proposal as 
appropriate. The rates will then be approved on an interim basis.
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    \3\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
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    WAPA is establishing the formula rates for LAP in accordance with 
section 302 of the DOE Organization Act (42 U.S.C. 7152).\4\
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    \4\ 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 Bureau of Reclamation (Reclamation) 
under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as 
amended and supplemented by subsequent laws, particularly section 
9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) and 
section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s); and 
other acts that specifically apply to the projects involved.
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    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, or to remand or 
disapprove such rates to FERC. By Delegation Order No. S1-DEL-S4-2022, 
effective March 14, 2022, the Secretary of Energy also delegated the 
authority to confirm, approve, and place such rates into effect on an 
interim basis to the Under Secretary for Science (and Innovation). By 
Redelegation Order No. S4-DEL-OE1-2021-2, effective December 8, 2021, 
the Under Secretary for Science (and Innovation) redelegated the 
authority to confirm, approve, and place such rates into effect on an 
interim basis to the Assistant Secretary for Electricity. By 
Redelegation Order No. 00-002.10-05, effective July 8, 2020, the 
Assistant Secretary for Electricity further redelegated the authority 
to confirm, approve, and place such rates into effect on an interim 
basis to WAPA's Administrator. This redelegation order, despite 
predating the December 2021 and March 2022 delegations, remains valid.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that RMR initiates or uses to develop the proposed formula 
rates will be available for inspection and copying at the Rocky 
Mountain Regional Office located at 5555 East Crossroads Boulevard, 
Loveland, Colorado. Many of these documents and supporting information 
are also available on RMR's website at: www.wapa.gov/regions/RM/rates/
Pages/2023-Rate-Adjustment_-Firm-Power.aspx.

Ratemaking Procedure Requirements

Environmental Compliance

    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.\5\
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    \5\ In compliance with the National Environmental Policy Act 
(NEPA) of 1969, as amended, 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).
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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.

Signing Authority

    This document of the Department of Energy was signed on May 4, 
2022, by Tracey A. LeBeau, Administrator, Western Area Power 
Administration, pursuant to delegated authority from the Secretary of 
Energy. That document, with the original signature and date, is 
maintained by DOE. For administrative purposes only, and in compliance 
with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on May 18, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2022-11029 Filed 5-24-22; 8:45 am]
BILLING CODE 6450-01-P