E7-25459. Salt Lake City Area Integrated Projects Firm Power, Colorado River Storage Project Transmission and Ancillary Services Rates-Rate Order No. WAPA-137

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 and the Colorado River Storage Project (CRSP) Transmission and Ancillary Services Rates. The SLCA/IP consists of the 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-F8, expire September 30, 2010, 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, maintenance, and replacements (OM&R), interest expenses, and the required repayment of investment within the allowable period.

The only proposed changes to the CRSP Transmission and Ancillary Services Rates are to change the expiration dates to September 30, 2010, in alignment with the SLCA/IP firm power rates.

Western will prepare a brochure that provides detailed information on the rates to all interested parties. The proposed rates under Rate Schedules SLIP-F9, SP-PTP7, SP-NW3, SP-NFT6, SP-CF1, SP-SD3, SP-RS3, SP-EI3, SP-FR3, and SP-SSR3 are scheduled to go into effect on October 1, 2008. 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 3, 2008. Western will present a detailed explanation of the proposed rates at a public information forum to be held on February 5, 2008, at 1:30 p.m. Western will accept oral and written comments at a public comment forum to be held on March 4, 2008, at 1:30 p.m. Western will accept written comments any time during the consultation and comment period.

ADDRESSES:

Send written comments to Mr. Bradley S. Warren, CRSP Manager, Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111-1580, [phone], e-mail [e-mail]. Western will post information about the rate process on its Web site under the “FY 2009 SLCA/IP Rate Adjustment” section located at: http://www.wapa.gov/​CRSP/​ratescrsp/​default.htm.

Western will post official comments received by 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 forum will be held at the Radisson Hotel Salt Lake City Airport, 2177 West North Temple, Salt Lake City, UT 84116-3196.

FOR FURTHER INFORMATION CONTACT:

Ms. Carol A. Loftin, Rates Manager, Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111-1580, [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 Deputy Secretary of Energy approved Rate Schedule SLIP-F8 for firm power service on August 1, 2005.^[1] Rate Schedule SLIP-F8 became effective on October 1, 2005, for a 5-year period ending September 30, 2010. Under Rate Schedule SLIP-F8, the energy rate is 10.43 mills per kilowatthour (mills/kWh), and the capacity rate is $4.43 per kilowattmonth (kWmonth). The composite rate is 25.28 mills/kWh. The Deputy Secretary of Energy also approved a rate extension for the CRSP Transmission and Ancillary Services Rates through September 30, 2010.^[2]

Firm Power Rates

The proposed rates are expected to become effective October 1, 2008. The proposed rates revenue requirements are based on the FY 2009 work plans for Western and the Bureau of Reclamation (Reclamation). These work plans form the bases for the FY 2009 Congressional budgets for the two agencies. The most current work plans will be included in the Rate Order submission. The FY 2006 historical data are the latest available for the rate proposal. The final ratesetting study will include the FY 2007 historical data as it becomes available.

The rate increase results primarily from the increase in the operation, maintenance, purchase power expense, and interest expense from the continued drought in the Upper Colorado River region. As in the prior rate adjustment for firm power, Western will determine firming energy purchase expense by using Median Hydrology. The table below displays the current and proposed firm power rates.

Comparison of Current and Proposed Firm Power Rates

Rate schedule	Current rate October 1, 2006-September 30, 2010 SLIP-F8	Proposed rate October 1, 2008-September 30, 2013 SLIP-F9	Change (percent)
Base Rate:
Energy: (mills/kWh)	10.43	11.95	15
Capacity: ($kW/month)	4.43	5.08	15
Composite Rate: (mills/kWh)	25.28	28.85	14

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 forecasted and has resulted in cost recovery issues for the SLCA/IP. To adequately recover expenses in times of financial hardship, Western will continue to calculate the cost recovery charge as in the current rate (SLIP-F8).

The CRC is an additional charge on all Sustainable Hydropower energy deliveries (long-term SLCA/IP hydropower capacity with energy) that may, at times, be applicable when cost recovery is at risk due to low hydropower generation and high prices for firming power. 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.

An environmental impact statement is being conducted by Reclamation for “Colorado River Interim Guidelines for Lower Basin Shortages and Coordinated Operations for Lakes Powell and Mead” is in process, and the preferred alternative will more than likely result in less water releases during certain drought criteria. Therefore, Western has also included a mechanism that allows Western to re-calculate the CRC if the annual water release from Glen Canyon Dam falls below that of 8.23 million acre-feet.

Transmission and Ancillary Service Rates

Western is not proposing at this time to change the formula-based rate for Firm Point-to-Point, Network, and non-firm Transmission Services or Ancillary Services that have been offered in both the WACM and the WALC control areas. These are being included in this rate process, however, to extend these formula rates through September 30, 2013, along with the firm power rates.

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 Federal Energy Regulatory Commission (FERC). 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 Colorado River Storage Project Management Center, 150 East 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 2009 SLCA/IP Rate Adjustment” section located at http://www.wapa.gov/​CRSP/​ratescrsp/​default.htm.

Ratemaking Procedure Requirements

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 Part 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.

Dated: December 5, 2007.

Timothy J. Meeks,

Administrator.

Footnotes

1.  Rate Order No. WAPA-117, 70 FR 47823, August 15, 2005. FERC confirmed and approved the rate schedules on June 13, 2006, under FERC Docket No. EF05-5171-000 (115 FERC 62,271). Approved Rate Schedule SLIP-F8 became effective on October 1, 2005, for a 5-year period ending September 30, 2010.

2.  Rate Order WAPA-132, 72 FR 37758, July 11, 2007. Extended Rate Schedules SP-PTP6, SP-NW2, SP-NFT5, SP-SD2, SP-RS2, SP-E12, SP-FR2, and SP-SSR1 for transmission and ancillary services were previously submitted as Rate Order No. WAPA-99, 67 FR 60656 (September 26, 2002), and approved by FERC on November 14, 2003 (105 FERC 62,093).