05-909. Salt Lake City Area Integrated Projects-Rate Order No. WAPA-117

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of proposed power rates.

SUMMARY:

The Western Area Power Administration (Western) is proposing adjustments to the Salt Lake City Area Integrated Projects (SLCA/IP) firm power rates. The SLCA/IP consists of the Colorado River Storage Project (CRSP), Collbran, and Rio Grande projects, which were integrated for marketing and ratemaking purposes on October 1, 1987, and two participating projects of the CRSP that have power facilities, the Dolores and Seedskadee projects. The current rates, under Rate Schedule SLIP-F7 expire September 30, 2007, but are not sufficient to meet the SLCA/IP revenue requirements. The proposed rates will provide sufficient revenue to pay all annual costs, including operation and maintenance, and replacements (OM&R), interest expenses, and the required repayment of investment within the allowable period. Western will prepare a brochure that provides detailed information on the rates to all interested parties. The proposed rates, under Rate Schedule SLIP-F8, are scheduled to go into effect on October 1, 2005. Publication of this Federal Register notice begins the formal process for the proposed rates.

DATES:

The consultation and comment period begins today and will end April 18, 2005. Western will present a detailed explanation of the proposed rates at a public information forum to be held on February 23, 2005, at 1:30 p.m. Western will accept oral and written comments at a public comment forum to be held on March 30, 2005, at 1:30 p.m. Western will accept written comments any time during the consultation and comment period.

ADDRESSES:

Send written comments to Bradley S. Warren, CRSP Manager, Colorado River Storage Project Management Center, Western Area Power Administration, PO Box 11606, Salt Lake City, UT 84147-0606, [phone], e-mail [e-mail], or Ms. Carol A. Loftin, Rates Manager, Colorado River Storage Project Management Center, Western Area Power Administration, PO Box 11606, Salt Lake City, UT 84147-0606, [phone], e-mail [e-mail]. Western will post information about the rate process on its Web site under the “FY 2006 SLCA/IP Rate Adjustment” section located at http://www.wapa.gov/​crsp/​rateanal.htm. Western will post official comments received via letter and e-mail to its Web site after the close of the comment period. Western must receive written comments by the end of the consultation and comment period to ensure consideration in Western's decision process. The public information forum and public comment forums will be held at the Quality Inn Salt Lake City Airport, 1659 West North Temple, in Salt Lake City, UT 84116-3196.

FOR FURTHER INFORMATION CONTACT:

Ms. Carol A. Loftin, Rates Manager, Colorado River Storage Project, Western Area Power Administration, PO Box 11606, Salt Lake City, UT 84147-0606, [phone], e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

The proposed rates for SLCA/IP firm power are designed to return an annual amount of revenue to meet the repayment of power investment, payment of interest, purchased power, OM&R expenses, and the repayment of irrigation assistance costs as required by law.

The Secretary of Energy approved Rate Schedule SLIP-F7 for firm power service on September 12, 2002 (Rate Order No. WAPA-99, 67 FR 60656, September 26, 2002), and the Federal Energy Regulatory Commission (Commission) confirmed and approved the rate schedules on November 14, 2003, under FERC Docket No. EF02-5171-000. Rate Schedule SLIP-F7 became effective on October 1, 2002, for a 5-year period ending September 30, 2007. Under Rate Schedule SLIP-F7, the energy rate is 9.5 mills per kilowatthour (mills/kWh), and the capacity rate is $4.04 per kilowattmonth (kWmonth). The composite rate is 20.72 mills/kWh.

Firm Power Rate

The proposed rate is expected to become effective October 1, 2005. The proposed rate revenue requirements are based on the FY 2006 work plans for Western and the Bureau of Reclamation (Reclamation). These work plans form the bases for the FY 2006 Congressional budgets for the two agencies. The most current work plans will be included in the Rate Order submission. The FY 2003 historical data are the latest available for the rate proposal. The final ratesetting study will include FY 2004 data as it becomes available.

The rate increase results primarily from the decrease in the customer contract energy commitments that were reduced on October 1, 2004, increased purchased power costs from the continued drought in the Upper Colorado River region, and an increase in deficits. The increase is offset by an increase in projected nonrate related revenues amounting to about $4.5 million per year (most of which are from the CRSP merchant function activities), the sale of CRSP transmission, and ancillary services.

Traditionally, Western used Reclamation's estimates of “Average Hydrology” to determine hydro generation and purchase power costs. For this proposal, Western will determine purchase power costs by using “Median Hydrology” for the first 5 years of the ratesetting period. Western believes that “Median Hydrology” is more representative of the current hydrology situation than “Average Hydrology.” For the remainder of the ratesetting period, Western will set the purchase power costs at $2 million per year based on anticipated operational needs.

Comparison of Current and Proposed Firm Power Rates

Rate schedule	Current rate Oct. 1, 2002- Sept. 30, 2007 SLIP-F7	Proposed rate Oct. 1, 2005- Sept. 30, 2010 SLIP-F8	Change
Base Rate:
Energy: (mills/kWh)	9.5	10.6	1.1
Capacity: ($kW/month)	4.04	4.50	.46
Composite Rate: (mills/kWh)	20.72	25.77	5.05

Cost Recovery Charge (CRC)

In setting its firm power rate, Western forecasts generation available from the SLCA/IP units and projects the firming energy purchase expense over the ratesetting period. These firming expense projections are included in the annual revenue requirement of the firm power rate. Over the last several years, both hydropower generation and power prices have been highly volatile. This volatility has caused actual purchased power expenses to be significantly higher than forecast and has resulted in cost recovery issues for the SLCA/IP. To adequately recover expenses in times of financial hardship, Western proposes to implement a cost recovery mechanism.

The CRC is an additional charge on all delivered Sustainable Hydropower energy deliveries (long-term SLCA/IP hydro capacity with energy) that may, at times, be applicable when cost recovery is at risk due to low hydropower generation and high power prices. The conditions that would trigger the CRC, as well as a more detailed formula methodology of how and when the CRC would apply, will be discussed in further detail in the Rate Brochure and at the Information Forum.

Legal Authority

Since the proposed rates constitute a major rate adjustment as defined by 10 CFR part 903, Western will hold both a public information forum and a public comment forum. After reviewing public comments and making possible amendments or adjustments to its proposed rates, Western will recommend the Deputy Secretary of Energy approve the proposed rates on an interim basis.

Western is establishing firm electric service rates for SLCA/IP under the Department of Energy Organization Act (42 U.S.C. 7152); 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 other acts that specifically apply to the projects involved.

By Delegation Order No. 00-037.00, effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates to Western'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, to remand, or to disapprove such rates to the Commission. Existing Department of Energy (DOE) procedures for public participation in power rate adjustments (10 CFR part 903) were published on September 18, 1985 (50 FR 37835).

Availability of Information

All brochures, studies, comments, letters, memorandums, or other documents that Western initiates or uses to develop the proposed rates are available for inspection and copying at the CRSP Management Center, located at 150 Social Hall Avenue, Suite 300, Salt Lake City, Utah. Many of these documents and supporting information are also available on its Web site under the “FY 2006 SLCA/IP Rate Adjustment” section located at http://www.wapa.gov/​crsp/​rateanal.htm.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) requires Federal agencies to perform a regulatory flexibility analysis if a final rule is likely to have a significant economic impact on a substantial number of small entities and there is a legal requirement to issue a general notice of proposed rulemaking. This action does not require a regulatory flexibility analysis since it is a rulemaking of particular applicability involving rates or services applicable to public property.

Environmental Compliance

In compliance with the National Environmental Policy Act (NEPA) of 1969, 42 U.S.C. 4321, et seq.; 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), Western has determined that this action is categorically excluded from the preparation of an environmental assessment or an environmental impact statement.

Determination Under Executive Order 12866

Western 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.

Small Business Regulatory Enforcement Fairness Act

Western has determined that this rule is exempt from congressional notification requirements under 5 U.S.C. 801 because the action is a rulemaking of particular applicability relating to rates or services and involves matters of procedure.

Dated: December 22, 2004.

Michael S. Hacskaylo,

Administrator.