[Federal Register Volume 88, Number 168 (Thursday, August 31, 2023)]
[Notices]
[Pages 60203-60205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18849]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project

AGENCY: Western Area Power Administration (WAPA), Department of Energy 
(DOE).

ACTION: Notice concerning fiscal year (FY) 2024 base charge and rates 
for Boulder Canyon Project (BCP) electric service.

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SUMMARY: The Deputy Secretary confirms, approves, and places into 
effect on a final basis the Boulder Canyon Project base charge and 
rates for fiscal year 2024 under Rate Schedule BCP-F11. The base charge 
increased 11.3 percent from $66.8 million in FY 2023 to $74.3 million 
in FY 2024. The change is primarily the result of an increase in the 
Bureau of Reclamation's (Reclamation) replacement costs, an increase in 
WAPA's operations and maintenance (O&M) expenses and replacement costs, 
and a decrease in prior year carryover funds from FY 2023.

DATES: The FY 2024 base charge and rates are effective October 1, 2023, 
and will remain in effect through September 30, 2024.

FOR FURTHER INFORMATION CONTACT: Jack D. Murray, Regional Manager, 
Desert Southwest Region, Western Area Power Administration, P.O. Box 
6457, Phoenix, AZ 85005-6457, or Tina Ramsey, Rates Manager, Desert 
Southwest Region, Western Area Power Administration, (602) 605-2565, or 
email: [email protected].

SUPPLEMENTARY INFORMATION: On March 31, 2023, the Federal Energy 
Regulatory Commission (FERC) approved and confirmed Rate Schedule BCP-
F11, under Rate Order No. WAPA-204, on a final basis through September 
30, 2027.\1\ WAPA published a Federal Register notice (Proposed FRN) on 
April 18, 2023 (88 FR 23669), proposing the FY 2024 base charge and 
rates under Rate Schedule BCP-F11. The Proposed FRN also initiated a 
90-day public consultation and comment period and

[[Page 60204]]

set forth the date and location 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. EF22-4-000 (2023).
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    The proposed FY 2024 base charge was a 3.5 percent increase over 
the FY 2023 base charge. In addition, due to recent favorable hydrology 
projections and following BCP contractor comments during the public 
consultation and comment period, additional funding of $5.5 million has 
been reallocated from future years to the FY 2024 budget to accelerate 
Reclamation's cylinder gate stem replacement project and continue 
WAPA's relay and breaker replacement project. These factors will 
increase the base charge 11.3 percent from $66.8 million in FY 2023 to 
$74.3 million in FY 2024.
    The rate-setting methodology for BCP electric service requires a 
calculation of an annual base charge rather than a unit rate for Hoover 
Dam hydropower. The base charge recovers an annual revenue requirement 
that includes projected costs of investment repayment, interest, 
operations, maintenance, replacements, payments to states, and Hoover 
Dam visitor services. Non-power revenue projections such as water 
sales, Hoover Dam visitor revenue, ancillary services, and late fees 
help offset these projected costs. Hoover power customers are billed a 
percentage of the base charge in proportion to their power allocation. 
Unit rates are calculated for comparative purposes but are not used to 
determine the charges for electric service.
    Rate Schedule BCP-F11 and the BCP Electric Service Contract require 
WAPA to calculate the annual base charge and rates for the next fiscal 
year before October 1 of each year. The FY 2023 BCP base charge and 
rates expire on September 30, 2023.

Comparison of Base Charge and Rates

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                                                      FY 2023         FY 2024      Amount change  Percent change
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Base Charge ($).................................      66,798,560      74,334,285       7,535,725            11.3
Composite Rate (mills/kWh)......................           22.43           23.10            0.67             3.0
Energy Rate (mills/kWh).........................           11.22           11.55            0.33             2.9
Capacity Rate ($/kW-Mo).........................            2.17            2.15           -0.02            -0.9
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    Reclamation's FY 2024 budget is increasing $3.3 million from $84.7 
million to $88 million, a 3.9 percent increase from FY 2023. Reflected 
in this budget, O&M costs are decreasing by $811,000 primarily due to 
the elimination of three positions and the associated travel and 
training costs. This decrease in O&M costs includes a mid-year review 
adjustment of $300,000, resulting from changing the financial audit 
period from every three years to every five years, thereby postponing 
the FY 2024 audit until FY 2026. Replacement costs are increasing by 
$3.3 million in FY 2024 due to continuing the unit control 
modernization, 480-volt switchgear, and the cylinder gate stem 
replacement projects. Post-retirement benefits costs are increasing 
$104,000 based on a higher five-year average of recent actual expenses. 
Visitor services costs are increasing by $728,000, primarily due to 
costs for the National Park Services security agreement being realigned 
from security forces in O&M to visitor services.
    WAPA's FY 2024 budget is increasing $850,000 to $9.6 million, a 9.7 
percent increase from FY 2023. WAPA's O&M costs are increasing $680,000 
from FY 2023 due to higher labor projections for salaries, overtime, 
overhead, and benefits and an updated charging methodology from 
overhead to direct charging for power billing. WAPA's replacement costs 
are increasing $130,000 from FY 2023 due to the continuation of the 
relay and breaker replacement project. WAPA's post-retirement benefit 
costs are increasing $39,000 from FY 2023 due to a higher five-year 
average of recent actual expenses.
    Costs for Reclamation and WAPA are offset by a slight increase of 
$18,000 in non-power revenue projections, resulting from a higher 
estimate for ancillary services. Prior year carryover is projected to 
be $2.2 million, a $3.4 million decrease from FY 2023.
    The proposed FY 2024 base charge for BCP electric service is 
projected to increase from $66.8 million in FY 2023 to $74.3 million in 
FY 2024, an 11.3 percent increase. The composite rate is increasing 3 
percent and the energy rate is increasing 2.9 percent. The capacity 
rate is decreasing 0.9 percent from FY 2023, due to increases in 
capacity forecasts. These unit rate calculations use forecasted energy 
and capacity values. With the uncertainty of hydrological conditions, 
Reclamation and Desert Southwest Region (DSW) will continue to work 
collaboratively to lessen the impact of the ongoing drought in the 
Colorado River Basin in subsequent years.

Public Notice and Comment

    DSW followed the Procedures for Public Participation in Power and 
Transmission Rate Adjustments and Extensions (10 CFR part 903) and 
General Regulations for the Charges for the Sale of Power from the BCP 
(10 CFR part 904). DSW took the following steps to involve interested 
parties in the rate process:
    1. DSW provided a website where information is posted about this 
rate process. The website is located at www.wapa.gov/regions/DSW/Rates/Pages/boulder-canyon-rates.aspx.
    2. On April 18, 2023, a Federal Register notice (88 FR 23669) 
announced the proposed FY 2024 base charge and rates and initiated the 
90-day public consultation and comment period.
    3. On April 18, 2023, DSW notified contractors and interested 
parties of the proposed rates and provided a copy of the published 
Proposed FRN by email.
    4. On May 18, 2023, DSW held a public information forum via video 
conference. This provided contractors and interested parties an 
opportunity to provide official comments for the record.
    5. On June 13, 2023, DSW posted on its website responses to 
questions asked at the public information forum about Reclamation's 
Supplemental Environmental Impact Statement, the Western Energy 
Imbalance Market, and the Colorado River Storage Project's potential 
participation in the Southwest Power Pool's Western Regional 
Transmission Organization.
    6. On June 20, 2023, DSW held a public comment forum via video 
conference. This provided contractors and interested parties an 
opportunity to provide official comments for the record.
    7. During the 90-day consultation and comment period, which ended 
on July 17, 2023, DSW received comments from 17 contractors and 
interested parties. DSW's responses to questions received prior to the 
public comment forum were posted to the BCP website. DSW's responses to 
comments received during or after the public comment forum appear 
below, paraphrased where

[[Page 60205]]

appropriate without compromising their meaning.
    Comment: At the public comment forum, five contractors and 
interested parties expressed support for increasing Reclamation and 
WAPA's replacement budgets for FY 2024. Following a special session of 
the BCP Engineering and Operating Committee on June 29, 2023, a summary 
of which is provided on DSW's website, 11 additional contractors and 
interested parties expressed support for increasing Reclamation and 
WAPA's replacement budgets by moving costs associated with 
Reclamation's cylinder gate stem project in the amount of $4.5 million 
and WAPA's relay and breaker replacement projects in the amount of 
$950,000 from future years into FY 2024. Commenters stated they are 
aware the acceleration of these projects will increase the FY 2024 base 
charge and rates. Commenters further noted the favorable hydrology 
projections for FY 2024 provide an opportunity to complete some needed 
maintenance, reduce the total cost of the projects, and should put 
downward pressure on the rates in subsequent years.
    Response: Reclamation and WAPA appreciate the comments and the 
support on the acceleration of Reclamation's cylinder gate stem project 
and the continuation of WAPA's relay and breaker replacement project. 
The costs associated with these projects have been moved from future 
years and will be included in the FY 2024 budget, base charge, and 
rates.
    Comment: One commenter expressed concerns about future work plans, 
maintaining and operating the Hoover Dam visitor center, and the 
decreasing Hoover Dam visitor center revenues. The commenter would like 
Reclamation and WAPA to continue their efforts to mitigate the effects 
on the base charge and rates and for Reclamation to consider making 
changes to the visitor center.
    Response: Reclamation and WAPA acknowledge the comment and will 
continue to work collaboratively with the contractors on moderating 
future costs and mitigating the effects on the base charge and rates to 
ensure rates are the lowest possible consistent with sound business 
principles.
    Comment: One commenter also requested that future energy and 
capacity projections be considered as alternative sets of data for 
future rate analysis.
    Response: Reclamation and WAPA agree with this request to consider 
alternative data sets in future rate analysis and will work to 
incorporate the data in future meetings.

Certification of Rates

    WAPA's Administrator certified the FY 2024 base charge and rates 
under Rate Schedule BCP-F11 are the lowest possible rates consistent 
with sound business principles. The base charge and rates were 
developed following administrative policies and applicable laws.

Availability of Information

    Information used by WAPA to develop the base charge and rates for 
electric service is available for inspection and copying at the Desert 
Southwest Customer Service Regional Office, located at 615 South 43rd 
Avenue, Phoenix, Arizona. Many of these documents are also available on 
DSW's website at www.wapa.gov/regions/DSW/Rates/Pages/boulder-canyon-rates.aspx.

Legal Authority

    DOE regulations governing charges for the sale of BCP power, 10 CFR 
904.7(e), require annual review of the BCP base charge and an 
``adjust[ment], either upward or downward, when necessary and 
administratively feasible, to assure sufficient revenues to effect 
payment of all costs and financial obligations associated with the 
[p]roject.'' WAPA's Administrator provided all BCP contractors an 
opportunity to comment on the proposed base charge adjustment, 
consistent with DOE procedures for public participation in rate 
adjustments. The BCP Electric Service Contract states for years other 
than the first year and each fifth year thereafter, when the rate 
schedule is approved by the Deputy Secretary on a provisional basis and 
by FERC on a final basis, adjustments to the base charge ``shall become 
effective upon approval by the Deputy Secretary of Energy.'' 
Accordingly, the Deputy Secretary of Energy may approve the FY 2024 
base charge and rates for BCP electric service, as authorized by the 
BCP Electric Service Contract and DOE's procedures for public 
participation in rate adjustments set forth at 10 CFR parts 903 and 
904.\2\
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    \2\ 50 FR 37835 (Sept. 18, 1985) and 84 FR 5347 (Feb. 21, 2019).
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    Following DOE's review of WAPA's proposal, and as authorized by 
applicable provisions of the BCP Electric Service Contract, I have 
confirmed, approved, and placed the FY 2024 base charge and rates for 
BCP electric service, under Rate Schedule BCP F-11, into effect on a 
final basis through September 30, 2024.

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 
1021: 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.\3\ A 
copy of the categorical exclusion determination is available on WAPA's 
website at www.wapa.gov/regions/DSW/Environment/Pages/environment.aspx.
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    \3\ 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).
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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 August 25, 
2023, by David M. Turk, Deputy 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 August 28, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2023-18849 Filed 8-30-23; 8:45 am]
BILLING CODE 6450-01-P