[Federal Register Volume 87, Number 223 (Monday, November 21, 2022)]
[Notices]
[Pages 70808-70816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25267]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Pick-Sloan Missouri Basin Program--Eastern Division-Rate Order 
No. WAPA-203

AGENCY: Western Area Power Administration, DOE.

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

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SUMMARY: The formula rates for the Upper Great Plains Region (UGP) 
Pick-Sloan Missouri Basin Program--Eastern Division (P-SMBP--ED) firm 
power service, firm peaking power service, and sale of surplus products 
have been confirmed, approved, and placed into effect on an interim 
basis (Provisional Formula Rates). These new formula rates replace the 
existing formula rates for these services under Rate Schedules P-SED-
F13, P-SED-FP13, and P-SED-M1, which expire on December 31, 2022. The 
P-SMBP--ED firm power service composite rate is increasing 16.3 
percent. There are no changes to the formula rate for sale of surplus 
products.

DATES: The Provisional Formula Rates under Rate Schedules P-SED-F14, 
Firm Power Service; P-SED-FP14, Firm Peaking Power Service; and Rate 
Schedule P-SED-M2, Sale of Surplus Products, are effective on the first 
day of the first full billing period beginning on or after January 1, 
2023, and will remain in effect through December 31, 2027, pending 
confirmation and approval by the Federal Energy Regulatory Commission 
(FERC) on a final basis or until superseded.

FOR FURTHER INFORMATION CONTACT: Lloyd Linke, Regional Manager, Upper 
Great Plains Region, Western Area Power Administration, 2900 4th Avenue 
North, 6th Floor, Billings, MT 59101-1266, or email: 
[email protected], or Linda Cady-Hoffman, Rates Manager, Upper Great 
Plains Region, Western Area Power Administration, (406) 255-2920, or 
email: [email protected] or [email protected].

SUPPLEMENTARY INFORMATION: On April 16, 2018, FERC confirmed and 
approved Formula Rate Schedules P-SED-F13, P-SED-FP13, and P-SED-M1, 
under Rate Order No. WAPA-180, on a final basis through December 31, 
2022.\1\ These schedules apply to P-SMBP--ED firm power service, firm 
peaking power service, and sale of surplus products. Western Area Power 
Administration (WAPA) published a Federal Register notice (Proposed 
FRN) on May 25, 2022 (87 FR 31878), proposing increases to both the 
base component and the drought adder component of the P-SMBP--ED firm 
power service and firm peaking power service and to put new 5-year rate 
schedules in place. The Proposed FRN also initiated a 90-day public 
consultation and comment period and set forth the dates and locations 
of the public information and public comment forums.
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    \1\ Order Confirming and Approving Rate Schedule on a Final 
Basis, FERC Docket No. EF18-2-000, 163 FERC ] 62,039 (2018).
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Legal Authority

    By Delegation Order No. S1-DEL-RATES-2016, effective November 19, 
2016, the Secretary of Energy delegated: (1) the authority to develop 
power and transmission rates to the WAPA 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-S3-2022-2, effective June 13, 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 Infrastructure. 
By Redelegation Order No. S3-DEL-WAPA1-2022, effective June 13, 2022, 
the Under Secretary for Infrastructure further redelegated the 
authority to confirm, approve, and place such rates into effect on an 
interim basis to WAPA's Administrator. This rate action is issued under 
Redelegation Order No. S3-DEL-WAPA1-2022 and

[[Page 70809]]

Department of Energy procedures for public participation in rate 
adjustments set forth at 10 CFR part 903.\2\
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    \2\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
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    Following review of UGP's proposal, Rate Order No. WAPA-203, which 
provides the formula rates for the P-SMBP--ED firm power service, firm 
peaking power service, and sale of surplus products, is hereby 
confirmed, approved, and placed into effect on an interim basis. WAPA 
will submit Rate Order No. WAPA-203 to FERC for confirmation and 
approval on a final basis.

Department of Energy Administrator, Western Area Power Administration

In the Matter of: Western Area Power Administration, Upper Great 
Plains Region, Rate Adjustment for the Pick-Sloan Missouri Basin 
Program--Eastern Division, Firm Power Service, Firm Peaking Power 
Service, and Sale of Surplus Products Formula Rates

Rate Order No. WAPA-203

Order Confirming, Approving, and Placing the Formula Rates for the 
Pick-Sloan Missouri Basin Program--Eastern Division Into Effect on an 
Interim Basis

    The formula rates in Rate Order No. WAPA-203 are established 
following section 302 of the Department of Energy (DOE) Organization 
Act (42 U.S.C. 7152).\3\
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    \3\ 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 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. S1-DEL-RATES-2016, effective November 19, 
2016, the Secretary of Energy delegated: (1) the authority to develop 
power and transmission rates to the Western Area Power Administration 
(WAPA) 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 the 
Federal Energy Regulatory Commission (FERC). By Delegation Order No. 
S1-DEL-S3-2022-2, effective June 13, 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 Infrastructure. 
By Redelegation Order No. S3-DEL-WAPA1-2022, effective June 13, 2022, 
the Under Secretary for Infrastructure further redelegated the 
authority to confirm, approve, and place such rates into effect on an 
interim basis to WAPA's Administrator. This rate action is issued under 
Redelegation Order No. S3-DEL-WAPA1-2022 and DOE procedures for public 
participation in rate adjustments set forth at 10 CFR part 903.\4\
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    \4\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
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Acronyms, Terms, and Definitions

    As used in this Rate Order, the following acronyms, terms, and 
definitions apply:
    Base: A component of the firm power and firm peaking power rate 
design that is a fixed revenue requirement that includes operation and 
maintenance expenses (O&M), investments and replacements, interest on 
investments and replacements, normal timing power purchases, and 
transmission costs.
    Capacity: The electric capability of a generator, transformer, 
transmission circuit, or other equipment. It is expressed in kilowatts 
(kW) or megawatts (MW).
    Capacity Rate: The rate which sets forth the charges for capacity. 
It is expressed in dollars per kilowatt-month (kWmonth) and applied to 
each kW of the Contract Rate of Delivery or 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 (mills/kWh) and used only for comparison 
purposes.
    Corps of Engineers Annual Operating Plan (AOP): The Corps of 
Engineers water management guidelines designed to meet the reservoir 
regulation objectives.
    Customer: An entity with a contract that is receiving Pick-Sloan 
Missouri Basin Program--Eastern Division (P-SMBP--ED) firm power 
service from WAPA.
    Customer Rate Brochure: A document prepared for public distribution 
explaining the rationale and background for the information contained 
in the Proposed FRN and in this rate order.
    Deficit(s): Deferred or unrecovered annual and/or interest 
expenses.
    Demand: The rate at which electric energy is delivered to or by a 
system or part of a system, generally expressed in kilowatts (kW) or 
megawatts (MW), at a given instant or averaged over any designated 
interval of time.
    Drought Adder: A component of the firm power and firm peaking power 
rate design that is a formula-based revenue requirement that includes 
future power purchases above normal timing power purchases, previous 
purchase power drought-related Deficits, and interest on the purchase 
power drought-related 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 (kWh).
    Energy Charge: The charge under the rate schedule for energy. It is 
expressed in mills/kWh and applied to each kWh delivered to each 
Customer.
    Firm: Power intended to be available at all times during the period 
covered by a guaranteed commitment to deliver, even under adverse 
conditions.
    FRN: Federal Register Notice--a document published in the Federal 
Register in order for WAPA to provide information of public interest.
    FY: WAPA's 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.
    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).
    NEPA: National Environmental Policy Act of 1969, as amended.
    Non-timing Power Purchases: Power purchases related to drought 
conditions, not related to operational constraints.
    Normal Timing Power Purchases: Power purchases related to 
operational constraints (e.g., management of endangered species 
habitat, water quality, navigation, balancing authority purposes, 
market events, etc.), not associated with drought conditions.
    O&M: Operation and maintenance expenses.
    OM&R: Operation, maintenance, and replacement expenses.
    Order RA 6120.2: DOE Order outlining Power Marketing Administration 
(PMA) financial reporting and rate-making procedures.
    Power: Capacity and energy.
    Power Factor: The ratio of real to apparent power at any given 
point and time in an electrical circuit. Generally, it is expressed as 
a percentage.
    Power Repayment Study (PRS): Defined in Order RA 6120.2 as a study 
portraying the annual repayment of power production and transmission 
costs of a power system through the application of revenues over the 
repayment period of the power system.

[[Page 70810]]

The study shows, among other items, estimated revenues and expenses, 
year by year, over the remainder of the power system's repayment period 
(based upon conditions prevailing over the cost evaluation period), the 
estimated amount of Federal investment amortized during each year, and 
the total estimated amount of Federal investment remaining to be 
amortized.
    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 Rates: Formula rates confirmed, approved, and 
placed into effect on an interim basis by the Secretary of Energy or 
his/her designee.
    Rate-setting PRS: The PRS used for the rate adjustment proposal.
    Regions: WAPA's Upper Great Plains Region (UGP) and Rocky Mountain 
Region (RMR).
    Revenue Requirement: The revenue required by the PRS to recover 
annual expenses (such as O&M, purchase power, transmission service, 
interest, and deferred expenses) and repay Federal investments and 
other assigned costs.
    Webex: Webex is an online secure invite-only meeting platform used 
by WAPA. The general website is https://doe.webex.com.
    Western Energy Imbalance Service Market (WEIS Market): The market 
for imbalance energy administered by the Southwest Power Pool in the 
Western Interconnection. The market footprint encompasses the loads and 
resources that are located within a participating Balancing Authority 
Area. The Western Area Colorado Missouri Balancing Authority or WACM 
(operated by RMR) and the Western Area Upper Great Plains West 
Balancing Authority or WAUW (operated by UGP) are both participating 
Balancing Authority Areas.
    Winter Storm Uri: A severe winter storm in February 2021 that had 
widespread impacts across UGP and RMR regions.

Effective Date

    The Provisional Formula Rate Schedules P-SED-F14, Firm Power 
Service; P-SED-FP14, Firm Peaking Power Service; and P-SED-M2, Sale of 
Surplus Products, will take effect on the first day of the first full 
billing period beginning on or after January 1, 2023, and will remain 
in effect through December 31, 2027, pending approval by FERC on a 
final basis or until superseded.

Public Notice and Comment

    UGP followed the Procedures for Public Participation in Power and 
Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these formula rates. The steps UGP took to involve 
interested parties in the rate process include:
    1. On May 25, 2022, a Federal Register notice (87 FR 31878) 
(Proposed FRN) announced the proposed formula rates and launched the 
90-day public consultation and comment period.
    2. On May 25, 2022, UGP notified Preference Customers and 
interested parties of the proposed rates and provided a copy of the 
published Proposed FRN.
    3. On June 15, 2022, UGP held a public information forum via Webex. 
UGP's representatives explained the proposed formula rates, answered 
questions, and gave notice that more information was available in the 
Customer Rate Brochure.
    4. On June 29, 2022, UGP held a public comment forum via Webex to 
provide an opportunity for customers and other interested parties to 
comment for the record.
    5. UGP provided a website that contains important dates, letters, 
presentations, FRNs, Customer Rate Brochure, and other information 
about this rate process. The website is located at www.wapa.gov/regions/UGP/rates/pages/2023-firm-rate-adjustment.aspx.
    6. During the 90-day consultation and comment period, which ended 
on August 23, 2022, UGP received 2 oral comment submissions and 16 
written comment letters. The comments and UGP's responses are addressed 
in the ``Comments'' section. All comments have been considered in the 
preparation of this Rate Order.
    Oral comments were received from the following organizations:
Missouri River Energy Services (MRES), South Dakota
Mid-West Electric Consumers Association, Colorado
    Written comments were received from the following organizations:
Missouri River Energy Services (MRES), South Dakota
Worthington Public Utilities, Minnesota
Valley City Public Works, North Dakota
Lakota Municipal Utilities, North Dakota
Elbow Lake Municipal Power, Minnesota
Hartley Municipal Utilities, Iowa
Hawarden Municipal Utilities, Iowa
City of Wadena, Minnesota
City of Vermillion Light & Power, South Dakota
Jackson, Minnesota
Willmar Municipal Utilities, Minnesota
Denison Municipal Utilities Denison, Iowa
Orange City, Iowa
City of Melrose Public Utility, Minnesota
East River Electric Power Cooperative, Inc., South Dakota
Mid-West Electric Consumers Association, Colorado

Power Repayment Study--Firm Power Service Rate Discussion

    A PRS is prepared each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the Pick-Sloan Missouri Basin Program (P-SMBP). Repayment criteria are 
based on applicable laws and legislation as well as policies including 
Order RA 6120.2. To meet the Cost Recovery Criteria outlined in Order 
RA 6120.2, UGP developed a rate adjustment to demonstrate sufficient 
revenues will be collected under the Provisional Formula Rates to meet 
future obligations. The revenue requirement for P-SMBP is recovered by 
both the UGP in the P-SMB--ED rates and by RMR in the Loveland Area 
Projects (LAP) rate. The revenue requirement and composite rate for P-
SMBP--ED firm power service are being increased, as indicated in Table 
1:

[[Page 70811]]



            Table 1--Comparison of Existing and Provisional Revenue Requirements and Composite Rates
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                                                                     Existing       Provisional
                                                                   requirements    requirements
                       Firm power service                          under P-SED-    under P-SED-   Percent change
                                                                     F13 as of       F14 as of
                                                                    January 1,      January 1,
-----------------------------------------------------------------------2018------------2023---------------------
P-SMBP--ED Revenue 1/ Requirement (million $)...................          $230.1          $268.4            16.6
P-SMBP--ED Composite Rate (mills/kWh)...........................           24.00           27.91            16.3
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1/ The Pick-Sloan--WD revenue requirement is recovered under the LAP rate schedule, which can be found under
  Rate Order No. WAPA-202 and on RMR's website at www.wapa.gov/regions/RM/rates/Pages/2023-Rate-Adjustment_-
  Firm-Power.aspx.

Firm Power Service--Existing and Provisional Formula Rates

    Under the current rate methodology, rates for P-SMBP--ED firm power 
and firm peaking power services are designed to recover an annual 
revenue requirement that includes investment repayment (including aid 
to irrigation), interest, purchase power, OM&R, and other expenses 
within the allowable period. The annual revenue requirement continues 
to be allocated equally between demand and energy.
    The Base component costs for the P-SMBP PRS have increased 
primarily due to: (1) increased OM&R from WAPA and the generating 
agencies; (2) increased purchase power, including during the Winter 
Storm Uri; (3) pricing volatility; (4) reduced surplus energy sales; 
and (5) the loss of certain balancing authority revenues for services 
that are no longer provided after RMR joined the WEIS Market. Winter 
Storm Uri was not a water or generation issue; therefore, its costs 
only impact the Base component.
    The driver behind the P-SMBP PRS Drought Adder component increase 
is the AOP 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 changes to the PRS Base and Drought Adder 
components results in an overall increase to the P-SMBP--ED rate. A 
comparison of the existing and Provisional Formula Rates for firm power 
and firm peaking power service is shown in Table 2:

                          Table 2--Comparison of Existing and Provisional Formula Rates
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                                                                     Existing       Provisional
                                                                   charges under   charges under
                                                                   rate schedule   rate schedule
             Firm power & firm peaking power service              P-SED-F13 & P-  P-SED-F14 & P-  Percent change
                                                                  SED-FP13 as of  SED-FP14 as of
                                                                    January 1,      January 1,
                                                                       2018            2023
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Firm Demand ($/kWmonth).........................................           $5.25           $6.20            18.1
Firm Energy (mills/kWh).........................................           13.27           15.27            15.1
Firm Peaking Demand ($/kWmonth).................................            4.75            5.70            20.0
Firm Peaking Energy 1/ (mills/kWh)..............................           13.27           15.27            15.1
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1/ Firm Peaking Energy is normally returned. This charge will be assessed in the event Firm Peaking Energy is
  not returned.

    As a part of the existing and provisional rate schedules, UGP 
provides for a formula-based adjustment of the Drought Adder component, 
with an annual increase of up to 2 mills/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 1-year cycle. The Drought Adder 
component may be adjusted downward by any amount. Continuing to 
identify the firm power service revenue requirement using Base and 
Drought Adder components will assist the Regions in presenting the 
future impacts of droughts, demonstrate repayment of drought-related 
costs in the PRS, and allow the Regions to be more responsive to 
changes caused by drought-related expenses. UGP will continue to charge 
and bill its customers firm power and firm peaking power service rates 
for energy and demand, which are the sum of the Base and Drought Adder 
components.
    Under Rate Schedule P-SED-F14, UGP will continue to identify its P-
SMBP--ED firm power service revenue requirement using Base and Drought 
Adder components. The Base component is a fixed revenue requirement 
that includes annual O&M, investment repayment and associated interest, 
Normal Timing Power Purchases, and transmission costs. UGP 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 in the Regions. The Drought Adder 
component includes costs associated with future Non-timing Power 
Purchases to meet firm power service 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-related Deficits. The Drought Adder component 
is designed to repay drought-related Deficits within 10 years from the 
time the Deficit was incurred, using balloon-payment methodology. For 
example, a drought-related Deficit incurred in FY 2022 will be repaid 
by FY 2032.
    The annual revenue requirement calculation will continue to be 
summarized by the following formula: Annual Revenue Requirement = Base 
Revenue Requirement + Drought Adder Revenue Requirement.
    The Provisional charge components update the Base component with 
present costs from a revenue

[[Page 70812]]

requirement of $230.1 million to $235.4 million and increases the 
Drought Adder component revenue requirement. For rate year 2023, the 
Drought Adder revenue requirement increases from zero to $33 million. A 
comparison of the existing and provisional components is shown in Table 
3:

                                        Table 3--Summary of P-SMBP--ED Existing and Provisional Charge Components
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                                           Existing charges under rate schedules P-SED-   Provisional charges under rate schedules P-SED-
                                              F13 & P-SED-FP13 as of January 1, 2018          F14 & P-SED-FP14 as of January 1, 2023
 Firm power & firm peaking power service ------------------------------------------------------------------------------------------------ Percent change
                                               Base        Drought adder                       Base        Drought adder
                                             component       component     Total charge      component       component     Total charge
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Demand (/kWmonth)..................           $5.25           $0.00           $5.25           $5.45           $0.75           $6.20            18.1
Firm Energy (mills/kWh).................           13.27            0.00           13.27           13.36            1.91           15.27            15.1
Firm Peaking Demand ($/kWmonth).........            4.75            0.00            4.75            5.00            0.70            5.70              20
Firm Peaking Energy 1/ (mills/kWh)......           13.27            0.00           13.27           13.36            1.91           15.27            15.1
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1/ Firm peaking energy is normally returned. This charge will be assessed in the event firm peaking energy is not returned.

    The Regions review the inputs for the P-SMBP Base and Drought Adder 
components after the annual PRS is complete, generally in the first 
quarter of the calendar year. If an adjustment to the P-SMBP Base 
component is necessary, or if an incremental upward adjustment to the 
P-SMBP PRS Drought Adder component greater than the equivalent of 2 
mills/kWh to the P-SMBP Composite Rate is necessary, the Regions will 
initiate a public process pursuant to 10 CFR part 903 prior to making 
adjustments.
    In accordance with the approved annual Drought Adder adjustment 
process, the Drought Adder component is reviewed annually in early 
summer to determine if drought costs differ from those projected in the 
PRS. In October, the Regions will determine if a change to the Drought 
Adder component is necessary, either incremental or decremental. Any 
incremental adjustment to the Drought Adder component, up to 2 mills/
kWh, or any decremental adjustment will be implemented by the Regions 
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-related Deficits from 
escalating as quickly, will lower the interest expense due to drought-
related Deficits, will demonstrate responsible Deficit management, and 
will provide prompt drought-related Deficit repayments.

Statement of Revenue and Related Expenses

    The following Table 4 provides a summary of the projected revenue 
and expense data for the P-SMBP revenue requirement during the 5-year 
rate-setting periods:

                  Table 4--P-SMBP Comparison of 5-Year Rate Periods Total Revenues and Expenses
----------------------------------------------------------------------------------------------------------------
                                                                                    Provisional
                                                                   Existing rate   rate FY2023-     Difference
                                                                   FY2018-FY2022   FY2027 ($000)      ($000)
                                                                      ($000)
----------------------------------------------------------------------------------------------------------------
            Total Revenues......................................        $2,720.2        $3,185.8          $465.6
Revenue Distribution............................................
Expenses
    O&M.........................................................         1,158.9         1,376.5           217.6
    Purchase Power..............................................           124.8           288.0           163.2
    Transmission................................................           461.0           845.2           384.2
    Interest....................................................           556.3           516.5          (39.8)
                                                                 -----------------------------------------------
        Total Expenses..........................................         2,301.0         3,026.2           725.2
Principal Payments:
    Capitalized Expenses (Deficits).............................           113.4           111.2           (2.2)
    Original Project and Additions..............................           187.2            38.2         (149.0)
    Irrigation Aid..............................................            45.7             0.0          (45.7)
    Replacements................................................            72.9            10.2          (62.7)
                                                                 -----------------------------------------------
        Total Principal Payments................................           419.2           159.6         (259.6)
                                                                 -----------------------------------------------
        Total Revenue Distribution..............................         2,720.2         3,185.8           465.6
----------------------------------------------------------------------------------------------------------------

Sale of Surplus Products Rate Discussion

    The sale of surplus products rate schedule is formula-based, 
providing for P-SMBP--ED Marketing Office to sell P-SMBP--ED surplus 
energy and demand products. If P-SMBP--ED 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. Rate

[[Page 70813]]

Schedule P-SED-M1 is being superseded by the Provisional Rate Schedule 
P-SED-M2 and continues to allow for the sale of energy, frequency 
response, regulation, and reserves.

Comments

    UGP received 2 oral and 16 written submissions during the public 
consultation and comment period. Comments expressed have been 
paraphrased and/or combined, where appropriate, without compromising 
the meaning of the comments:
    A. Comment: The customer association, member utility, and the 
action agency commented that they understand a rate increase is 
warranted due to several factors: (1) persistent low water conditions 
in the P-SMBP--ED, (2) increasing market power pricing, (3) costs 
incurred during the Winter Storm Uri, and (4) inflation on O&M and 
capital investments for the system. They encourage WAPA to continue 
focus on identifying and reducing controllable costs within the Regions 
and at WAPA's Headquarters. The action agency understands the full rate 
increase of 16.3 percent is necessary in 2023.
    Response: The Regions appreciate the commentors' recognition of the 
specific costs and repayment obligations of the PRS and the need for 
the rate adjustments. The Regions are committed to developing rates 
that are the lowest possible, consistent with sound business 
principles.
    B. Comment: The action agency commented that they understand the 
need to cover expenses necessary to provide firm, reliable service that 
is sustainable, and wants to ensure that proper planning is in place in 
order to guarantee the solvency of the system and not get into the 
situation the P-SMBP--ED experienced during the last drought.
    Response: UGP appreciates the commentor's understanding of the 
impacts of drought conditions in the P-SMBP--ED. UGP intends to 
continue transparency and data sharing to encourage a strong working 
relationship with our Customers as we continue to provide products that 
are reliable and sustainable and meet repayment obligations of the 
power system.
    C. Comment: Several Customers commented that this rate adjustment 
is substantial for the communities they serve, and they would have 
preferred for this increase to be implemented in multiple stages rather 
than one large increase beginning in 2023. They stated perhaps this 
could have been achieved by starting a few years earlier in planning 
for rate adjustments.
    Response: The 10-month timeline associated with a public process is 
a major factor when initiating rate adjustments. Given the required 
timeline, in addition to the timing of the data to effectively evaluate 
impacts to the rate, UGP was as timely as could be when initiating this 
rate adjustment. UGP did notify Customers in both the spring 2021 and 
fall 2021 Drought Adder review letters that the rate schedules were 
expiring December 31, 2022, and that we would be in a formal rate 
process in 2022 to put new rates in place.
    D. Comment: The action agency and customer association commented 
that they recommend the Rate's staff and Regional leadership continue 
to meet regularly with the Mid-West Electric Consumers Association's 
(Mid-West) Water and Power Committee on a quarterly basis to update and 
advise the members on the latest information on hydrology outlook, 
power supply costs, system storage, and potential need for future 
adjustments as this will allow more advance notice for dealing with 
future issues.
    Response: Customer meeting attendance is outside the scope of this 
rate process; however, the Regions do intend to continue communication 
with our Customers and customer groups, as appropriate.
    E. Comment: The action agency commented they prefer WAPA return to 
meeting with Customers/customer groups in person, as many in the 
industry have been meeting face-to-face for several months (post-
COVID), and that it is important to have those in-person meetings to 
deal with issues more fully as this is the means to further 
understanding and to more efficiently resolve issues.
    Response: Customer meeting attendance is outside the scope of this 
rate process; however, the Regions appreciate the comments and strive 
to communicate as broadly as possible with our Customers. It is the 
Regions' observation that the virtual meetings held for this rate 
process had greater attendance than when in person meetings were held 
prior to March 2020.
    F. Comment: The action agency commented that the Regions should 
provide for more comprehensive and rigorous scenario analysis as part 
of the PRS and show details related to the assumptions and the results 
to Customers/customer groups. It also was noted that the new PRS system 
utilized by WAPA does not have the transparency promised and has not 
been as successful or open to customer access through the PRS customer 
portal.
    Response: UGP intends to continue transparency and data sharing to 
encourage a strong working relationship with our Customers/customer 
groups. The PRS software tool is outside the scope of this rate 
process; however, WAPA's Information Technology (IT) and Rates staff 
have been evaluating the concerns with the PRS software. IT has 
contacted the vendor to address the issues and developed a plan to 
hopefully address the interface issue for external entity interfacing.
    G. Comment: The action agency, customer association, and member 
utility request WAPA staff continue transparent engagements with the 
Customers and customer groups to better understand WAPA's efforts to 
control and mitigate costs, rate impacts, impacts of drought 
conditions, importance of rate stability, and need for risk mitigation 
through regular meetings with the Mid-West Water and Power Committee 
and impacted customer groups. The strong collaboration between 
customers and WAPA benefits everyone and improves the value we all 
provide to the consumer-owners at the end of the line.
    Response: The Regions appreciate the support of our Customers and 
customer groups and agree that collaboration is vital when faced with 
uncertain drought conditions and other impacts to the firm power rates. 
The Regions intend to continue communication with our Customers and 
customer groups as appropriate.
    H. Comment: The customer association and member utility commented 
that they appreciated the efforts of the UGP and RMR Rates staff for 
understanding Customer concerns regarding the rate.
    Response: The Regions thank the commentors for recognizing the UGP 
and RMR Rates staff and their efforts to ensure Customer concerns are 
addressed.
    I. Comment: A customer association and a member utility commented 
their customers are already feeling the impacts of the current drought 
in the P-SMBP--ED and understand the need for the Drought Adder and the 
process for the Drought Adder evaluation. They requested debt strategy 
and rate design options be discussed with customers before any final 
decisions are made as a part of the annual Drought Adder review 
process.
    Response: The Regions agree with the need for continued 
transparency regarding debt strategy and rate options related to the 
annual Drought Adder adjustment process. The proposed rates did not 
reflect any change to the Regions' existing rate designs or annual

[[Page 70814]]

Drought Adder adjustment process. Changes to the rate designs or 
adjustment process would require a separate rate process where 
Customers and interested parties would have the opportunity to 
participate in the process. The 2007 rate orders implementing the 
Drought Adder component provided the framework for the annual Drought 
Adder adjustment process, which has not been modified in subsequent 
rate orders.
    J. Comment: The member utility encourages WAPA to focus on its core 
function of marketing and delivering Preference Power to Preference 
Customers.
    Response: The Regions appreciate the comment and intend to continue 
to fulfill our mission of marketing to Preference Power Customers 
consistent with current marketing plans.
    K. Comment: The customer association commented that they support 
the comments of their member utilities and fellow customer groups.
    Response: The Regions appreciate the commentor's feedback. The 
Regions conducted a combined public process for the rate adjustments 
under Rate Order Nos. WAPA-202 and WAPA-203 and have coordinated all 
responses. Comments received specifically by RMR for the LAP rate 
process are recognized as being addressed in RMR's Rate Order No. WAPA-
202.
    L. Comment: The customer association and member utility appreciated 
the opportunity to comment on the rate process, stating that any rate 
increase has a direct impact on the energy affordability of the members 
it serves.
    Response: The Regions recognize the impact of the rate increases on 
Customers and strive to find ways to mitigate impacts of the drought 
and operational costs to keep rates as low as possible.

Certification of Rates

    I have certified that the Provisional Formula Rates for P-SMBP--ED 
firm power service under Rate Schedule P-SED-F14, P-SMBP--ED firm 
peaking power service under Rate Schedule P-SED-FP14, and P-SMBP--ED 
sale of surplus products under Rate Schedule P-SED-M2 are the lowest 
possible rates, consistent with sound business principles. The 
Provisional Formula Rates were developed following administrative 
policies and applicable laws.

Availability of Information

    Information about this rate adjustment, including the Customer Rate 
Brochure, PRSs, comments, letters, memorandums, and other supporting 
materials that were used to develop the Provisional Formula Rates, is 
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 UGP's website at 
www.wapa.gov/regions/UGP/rates/Pages/2023-firm-rate-adjustment.aspx

Ratemaking Procedure Requirements

Environmental Compliance

    WAPA has determined that this action fits within the following 
categorical exclusions listed in appendix B to subpart D of 10 CFR part 
1021.410: B4.3 (Electric power marketing rate changes). Categorically 
excluded projects and activities do not require preparation of either 
an environmental impact statement or an environmental assessment.\5\ A 
copy of the categorical exclusion determination is available on WAPA's 
website at www.wapa.gov/regions/UGP/Environment/Pages/CX2022.aspx.
---------------------------------------------------------------------------

    \5\ The determination was done in compliance with NEPA (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).
---------------------------------------------------------------------------

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 above and under the authority delegated to me, I 
hereby confirm, approve, and place into effect, on an interim basis, 
Rate Order No. WAPA-203. The rates will remain in effect on an interim 
basis until: (1) FERC confirms and approves them on a final basis; (2) 
subsequent rates are confirmed and approved; or (3) such rates are 
superseded.

Signing Authority

    This document of the Department of Energy was signed on November 9, 
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 November 16, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

Rate Schedule P-SED-F14 (Supersedes Rate Schedule P-SED-F13): Effective 
January 1, 2023

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-203)

Effective

    The first day of the first full billing period beginning on or 
after January 1, 2023, through December 31, 2027, 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, as established in the contract for 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, 2023, under the Rate:
    CAPACITY CHARGE: $6.20 for each kilowatt per month (kWmonth) of 
billing capacity.

[[Page 70815]]

    ENERGY CHARGE: 15.27 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 power purchases (purchases 
due to operational constraints, not associated with drought), and 
transmission costs. Any proposed change to the Base component will 
require a public process. As of January 1, 2023, the Base component 
revenue requirement is $213.8 million and the charges under the 
formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.018

    Drought Adder Component: A formula-based revenue requirement that 
includes future power purchases above normal timing power purchases, 
previous purchase power drought-related deficits, and interest on the 
purchase power drought-related deficits. As of January 1, 2023, the 
Drought Adder component revenue requirement is $30.0 million and the 
charges under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.019

Annual Drought Adder Adjustment Process

    The Drought Adder component may be adjusted annually using the 
above formulas for any costs attributed to drought of less than or 
equal to the equivalent of 2 mills/kWh to the Pick-Sloan Missouri Basin 
Program Power Repayment Study (PRS) composite rate. Any planned 
incremental upward adjustment to the Drought Adder component 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 the 
Upper Great Plains Region (UGP) reviews the Drought Adder component and 
provides notice of any estimated change to the Drought Adder component 
charge under the formula. In October, UGP 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. UGP will 
inform customers of updates by letter and post updates to UGP's 
external website.

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 within the range of 95-percent leading and 95-percent 
lagging, measured at the point of interconnection.

Rate Schedule P-SED-FP14 (Supersedes Rate Schedule P-SED-FP13): 
Effective January 1, 2023

United States Department of Energy, Western Area Power Administration

Upper Great Plains Region Pick-Sloan Missouri Basin Program--Eastern 
Division

Firm Peaking Power Service (Under Rate Order No. WAPA-203)

Effective

    The first day of the first full billing period beginning on or 
after January 1, 2023, through December 31, 2027, 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, as 
established in the contract for 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, 2023, under the Rate:
    CAPACITY CHARGE: $5.70 for each kilowatt per month (kWmonth) of the 
effective contract rate of delivery for peaking power or the maximum 
amount scheduled, whichever is greater.
    ENERGY CHARGE: 15.27 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 power purchases (purchases 
due to operational constraints, not associated with

[[Page 70816]]

drought), and transmission costs. Any proposed change to the Base 
component will require a public process. As of January 1, 2023, the 
Base component revenue requirement is $21.6 million and the charges 
under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.020

    Drought Adder Component: A formula-based revenue requirement that 
includes future power purchases above normal timing power purchases, 
previous purchase power drought-related deficits, and interest on the 
purchase power drought-related deficits. As of January 1, 2023, the 
Drought Adder component revenue requirement is $3.0 million and the 
charges under the formulas are:
[GRAPHIC] [TIFF OMITTED] TN21NO22.021

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 Pick-Sloan Missouri Basin Program 
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 the 
Upper Great Plains Region (UGP) reviews the Drought Adder component and 
provides notice of any estimated change to the Drought Adder component 
charge under the formula. In October, UGP 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. UGP will 
inform customers of updates by letter and post updates to UGP's 
external website.
    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-M2 (Supersedes Rate Schedule P-SED-M1): Effective 
January 1, 2023

United States Department of Energy, Western Area Power Administration

Upper Great Plains Region Pick-Sloan Missouri Basin Program--Eastern 
Division

Sale of Surplus Products (Under Rate Order No. WAPA-203)

Effective

    The first day of the first full billing period beginning on or 
after January 1, 2023, through December 31, 2027, or until superseded 
by another rate schedule, whichever occurs earlier.

Applicable

    This rate schedule applies to Pick-Sloan Missouri Basin Program--
Eastern Division (P-SMBP--ED) 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, the Upper Great 
Plains Region (UGP) can make the product(s) available for sale, 
providing entities enter into a separate agreement(s) with the UGP 
Marketing Office which will specify the terms of sale(s).

Formula Rate

    The charge for each product will be 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. 2022-25267 Filed 11-18-22; 8:45 am]
BILLING CODE 6450-01-P