[Federal Register Volume 89, Number 125 (Friday, June 28, 2024)]
[Notices]
[Pages 53992-53995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14274]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects--Rate Order No. WAPA-212

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

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

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SUMMARY: The Rocky Mountain (RM) region of the Western Area Power 
Administration (WAPA) proposes revised formula rates for the Loveland 
Area Projects (LAP) firm electric service (FES) 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-
F12 and L-M3, do not expire until December 31, 2027; however, the 
existing FES rate no longer provides sufficient revenues to recover 
interest expense and repay investments. The formula rate for sale of 
surplus products is not changing but is being included in Rate Order 
No. WAPA-212 (WAPA-212) in order to make these rate schedules effective 
for the same time frame.

DATES: A consultation and comment period will begin June 28, 2024 and 
end August 27, 2024. Due to not receiving final Fiscal Year (FY) 2023 
financial data until late January, holding subsequent rate impact 
discussions with customers between February and April, and the 
subsequent time frame required for completion of the Federal Register 
notice workflow process, the publication of this proposal was not 
possible prior to the June 2024 time frame. As such, and in order to 
continue with the existing January 2025 implementation date, the time 
frame of the consultation and comment period has been shortened from 
the standard 90 days to 60 days. This shortened time frame is allowed 
under 10 CFR 903.14(a), which states that, ``. . . periods may be 
shortened for good cause shown.''
    RM will present a detailed explanation of the proposed LAP formula 
rates and other modifications at a public information forum that will 
be held on August 7, 2024, at 8:30 a.m. MDT to no later than 10:30 a.m. 
MDT. RM will also host a public comment forum on August 7, 2024, at 
11:00 a.m. MDT to no later than noon MDT. The

[[Page 53993]]

public information forum and the public comment forum will only be 
conducted virtually. Instructions for participating in the forums will 
be posted on RM's website at least 14 days prior to the public 
information and comment forums at: www.wapa.gov/about-wapa/regions/rm/rm-rates/2025-rate-adjustment-firm-electric-service.
    RM 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 RM 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]. RM will post information 
about the proposed formula rates and written comments received to its 
website at: www.wapa.gov/about-wapa/regions/rm/rm-rates/2025-rate-adjustment-firm-electric-service.

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

SUPPLEMENTARY INFORMATION: On September 12, 2023, FERC confirmed and 
approved Rate Schedule L-F12 and Rate Schedule L-M3 under Rate Order 
No. WAPA-202 (WAPA-202) on a final basis through December 31, 2027.\1\ 
These schedules apply to FES and the sale of surplus products. RM 
intends the proposed formula rates under Rate Schedule L-F13 and Rate 
Schedule L-M4 to go into effect January 1, 2025. The proposed formula 
rate schedules would remain in effect until December 31, 2029, or until 
WAPA supersedes or changes the formula rates through another public 
rate process pursuant to 10 CFR part 903, whichever occurs first.
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    \1\ Order Confirming and Approving Rate Schedules on a Final 
Basis, FERC Docket No. EF23-1-000 (2023).
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    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 RM's website at: www.wapa.gov/about-wapa/regions/rm/rm-rates/2025-rate-adjustment-firm-electric-service.

Firm Electric Service

    The Fry-Ark and the P-SMBP FY 2023 Power Repayment Studies' (PRSs) 
revenue requirements, changes to future workplans, and projected water 
conditions are the determining factors for this proposed rate 
adjustment.
    The base component costs for the Fry-Ark have increased primarily 
due to increased annual expenses, mainly transmission purchases and 
OM&R from both WAPA and the Bureau of Reclamation (Reclamation).
    The base component costs for the P-SMBP have increased primarily 
due to increased OM&R from WAPA and the generating agencies.
    The driver behind the P-SMBP drought adder component decrease is 
the United States Army Corps of Engineers (USACE) 2024 Annual Operating 
Plan (AOP) projecting less than average generation, though it is better 
than generation projected in the WAPA-202 January 2023 rate. Planned 
repayment of both the base and drought deficits are in the same time 
frame (2027) as they were projected to be repaid under WAPA-202. 
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 revenue 
requirement. Under Rate Schedule L-F13, RM is proposing a two-step rate 
adjustment. For the base component, the revenue requirements and 
associated charges for each step would be set values. For the drought 
adder component, RM is proposing estimated revenue requirements based 
on the USACE's 2024 AOP and drought costs projected in the Final FY 
2023 PRSs for the first and second steps. RM will follow the previously 
established ``annual drought adder adjustment process'' to determine if 
these estimated values for the January 2025 and 2026 rate years require 
adjustment. If a drought adder component change is required for January 
2025, a modified drought adder revenue requirement and the associated 
charges for January 2025, and possibly new estimates for January 2026, 
will be included in the publication of the notice of rate order WAPA-
212 and become effective January 1, 2025. RM will also inform customers 
of updates by letter and post updates to RM's external website.
    A comparison of the current and proposed revenue requirements is 
shown in Table 1:

                     Table 1--Summary of Current and Two-Step Proposal Revenue Requirements
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                                                  Proposed under                  Proposed under
                                   Current under    L-F13 first                    L-F13 second
    LAP firm electric service       L-F12 as of     step as of      First step      step as of      Second step
                                   Jan. 1, 2023    Jan. 1, 2025   percent change   Jan. 1, 2026   percent change
                                  (in million $)  (in million $)                  (in million $)
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Total Revenue Requirement \1\...           $74.6           $81.3             9.0           $87.9             8.1
    Pick-Sloan--WD \2\..........            58.5            62.6             7.0            66.3             5.9
    Fry-Ark.....................            16.1            18.7            16.1            21.6            15.5
Base Component..................            67.8            76.4            12.7            85.1            11.4
    Pick-Sloan--WD \2\..........            51.7            57.7            11.6            63.5            10.1
    Fry-Ark.....................            16.1            18.7            16.1            21.6            15.5
Drought Adder Component \3\.....             6.8             4.9           -27.9             2.8           -42.9
    Pick-Sloan--WD \2\..........             6.8             4.9           -27.9             2.8           -42.9
    Fry-Ark.....................             0.0             0.0             0.0             0.0             0.0
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\1\ Proposed values are estimates only based on using final base and estimated drought adder components.

[[Page 53994]]

 
\2\ Additional information on the overall P-SMBP PRS and charge components can be found in the proposal under
  Rate Order No. WAPA-213 and on the Upper Great Plains region's website at: www.wapa.gov/about-wapa/regions/ugp/ugp-rates/2025-firm-rate-adjustment.
\3\ Proposed values are estimates that may change during the existing annual drought adder adjustment process.

    Under the current rate methodology, rates for LAP FES 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 1--Summary of Current and Two-Step Proposal Rates
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                                                  Proposed under                  Proposed under
                                   Current under    L-F13 first                    L-F13 second
      Firm electric service         L-F12 as of     step as of      First step      step as of      Second step
                                   Jan. 1, 2023    Jan. 1, 2025   percent change   Jan. 1, 2026   percent change
                                        \1\             \1\                             \1\
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LAP Composite Rate (mills/                 36.61           39.84             8.8           43.10             8.2
 kilowatt-hour).................
Firm Capacity Rate ($/kilowatt-            $4.80           $5.22             8.8           $5.65             8.2
 month).........................
Firm Energy Rate (mills/kilowatt-          18.31           19.92             8.8           21.55             8.2
 hour)..........................
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\1\ Proposed values are estimates only based on using final base and estimated drought adder components.

    As a part of the current and proposed rate schedules, RM 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 FES revenue requirement using base and 
drought adder components will assist RM in the presentation of future 
impacts of droughts, demonstrate repayment of drought-related costs in 
the PRSs, and allow RM to be more responsive to changes caused by 
drought-related expenses. RM will continue to charge and bill its 
customers FES rates for energy and capacity, which are the sum of the 
base and drought adder components.
    A summary of the proposed charge components is shown in Table 3:

                                                 Table 3--Summary of Two-Step Proposal Charge Components
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                                                            Proposed charges under rate schedule L-F13      Proposed charges under rate schedule L-F13
                                                                   first step as of Jan. 1, 2025                  second step as of Jan. 1, 2026
                                                         -----------------------------------------------------------------------------------------------
                                                                           Drought adder   Total charge                    Drought adder   Total charge
                                                          Base component   component \1\        \2\       Base component   component \1\        \2\
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Firm Capacity ($/kilowatt-month)........................           $4.91           $0.31           $5.22           $5.47           $0.18           $5.65
Firm Energy (mills/kWh).................................           18.72            1.20           19.92           20.86            0.69           21.55
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\1\ Proposed values are estimates that may change during the existing annual drought adder adjustment process.
\2\ Proposed values are estimates only based on using final base and estimated drought adder components.

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-M4, 
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.\2\ 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), RM will hold public 
information and public comment forums for this rate adjustment. RM 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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    \2\ 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 
section302 of the 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 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 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-S3-2023, effective April 10, 2023, 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

[[Page 53995]]

Redelegation Order No.S3-DEL-WAPA1-2023, effective April 10, 2023, the 
Under Secretary for Infrastructure redelegated the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to WAPA's Administrator.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that RM initiates or uses to develop the proposed formula 
rates are 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 RM's website at: www.wapa.gov/about-wapa/regions/rm/rm-rates/2025-rate-adjustment-firm-electric-service.

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.\4\
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    \4\ 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 June 24, 
2024, 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 June 25, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2024-14274 Filed 6-27-24; 8:45 am]
BILLING CODE 6450-01-P