2024-26162. Final 2028 Parker-Davis Project Power Marketing Plan and Call for Resource Pool Applications
-
AGENCY:
Western Area Power Administration, Department of Energy (DOE).
ACTION:
Notice of final plan and call for resource pool applications.
SUMMARY:
The Department of Energy (DOE), Western Area Power Administration (WAPA), Desert Southwest Region (DSW), announces its Final 2028 Parker-Davis Project (P-DP) Power Marketing Plan (Final 2028 Plan) and issues a Call for Resource Pool Applications. This notice responds to comments received on the Proposed 2028 P-DP Power Marketing Plan (Proposed 2028 Plan). The Final 2028 Plan specifies the terms and conditions under which WAPA will market power from P-DP from October 1, 2028, through September 30, 2048. WAPA will offer new contracts for the sale of power to existing contractors and create a resource pool for potential new applicants. Entities who wish to apply for a new allocation of power from WAPA, and who meet the criteria defined in the Final 2028 Plan, must submit a formal application using the Applicant Profile Data (APD) form and must meet the Eligibility Criteria and Allocation Criteria described herein. The General Criteria and Contract Principles set forth in the Final 2028 Plan will apply to new allottees and existing contractors. This Final 2028 Plan supersedes all previous marketing plans for P-DP.
DATES:
The Final 2028 Plan will become effective December 12, 2024 to make power allocations and complete the other processes necessary to begin providing service on October 1, 2028. Resource pool applications must be received on or before 5:00 p.m., Mountain Standard Time (MST), on January 31, 2025. WAPA will accept applications using the APD form by email or by certified mail (or its equivalent). Applications sent by regular mail will be accepted if postmarked before January 31, 2025, and received no later than February 5, 2025. WAPA will not consider applications unless they are received by the prescribed dates.
ADDRESSES:
Preference entities interested in applying for an allocation of WAPA power may complete the APD form available at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/ and mail the signed and dated APD form to Ms. Jennifer Henn, Power Marketing Advisor, Desert Southwest Region, Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457. APD application forms with an electronic signature (e-signature) may be emailed to pdp-remarketing@wapa.gov. If an electronic signature is not available, the signed APD form may be scanned and emailed to the address above, faxed to (602) 605-4663, or mailed it to the address above. All APD forms must be received by WAPA within the time required in the DATES section, herein. WAPA will publish a notice of Proposed 2028 Allocations in the Federal Register after evaluating all applications.
FOR FURTHER INFORMATION CONTACT:
Jennifer Henn, Power Marketing Advisor, Desert Southwest Region, Western Area Power Administration, (602) 605-2572 or email: pdp-remarketing@wapa.gov. Information on development of the Final 2028 Plan can be found at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.
SUPPLEMENTARY INFORMATION:
Development of the Final 2028 Plan
P-DP power facilities include Davis Dam, with its current total operating capacity of 255,000 kilowatts (kW) for P-DP and expected increase of approximately 3,750 kW from the rewind of Unit 3, and Parker Dam, with 60,000 kW of operating capacity allotted to P-DP and 60,000 kW allotted to Metropolitan Water District of Southern California. Both dams are owned and operated by the Bureau of Reclamation (Reclamation). WAPA owns and operates approximately 1,500 miles of high voltage transmission lines and 45 substations throughout Arizona, California, and Nevada to facilitate delivery of P-DP power in those three states.
On September 30, 2028, WAPA's existing long-term sales contracts for P-DP power will expire. WAPA began developing the Final 2028 Plan with a series of informal public information meetings for existing and new potential contractors. These meetings helped ( print page 89000) WAPA identify pertinent issues to address in the Proposed 2028 Plan. WAPA subsequently published its Proposed 2028 Plan (1) to define the products and services WAPA will offer, and (2) to determine the criteria for marketing and allocating power from October 1, 2028, through September 30, 2048 (89 FR 43841). WAPA held a public information forum on June 20, 2024, to present the Proposed 2028 Plan and answer questions. On July 19, 2024, WAPA held a public comment forum to receive verbal comments. WAPA accepted written comments from the public through the end of the consultation and comment period on August 19, 2024. This notice sets forth WAPA's Final 2028 Plan and responds to comments received on the Proposed 2028 Plan.
Based on comments received, WAPA will: (1) apply the Energy Planning and Management Program (EPAMP) Power Marketing Initiative (PMI) regulations, set forth at 10 CFR 905.30 through 10 CFR 905.37, to the P-DP remarketing effort; (2) extend 98 percent of marketable capacity to existing contractors for a term of 20 years; and (3) use the remaining two percent of marketable capacity for the creation of a resource pool. WAPA will make allocations from the resource pool to eligible preference contractors using the Eligibility Criteria and Allocation Criteria for Resource Pool Allocations described in this notice and under the Final 2028 Plan. The Final 2028 Plan also sets forth General Criteria and Contract Principles that will apply to new allottees and existing contractors. This Final 2028 Plan supersedes all previous marketing plans for this project.
Responses to Comments Received on the Notice of Proposed Plan
During the public consultation and comment period, WAPA received nine letters commenting on the Proposed 2028 Plan. The letters are available on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/. Six contractors and interested stakeholder representatives commented during the July 19, 2024, public comment forum. Transcripts from the public meetings are also available on WAPA's website. In addition, multiple parties requested clarification on the Proposed 2028 Plan during the 90-day public consultation and comment period. WAPA provided clarifying responses to these questions during the consultation and comment period. These responses remain available on WAPA's website at the address above and are not included below.
The following is a summary of the comments received during the consultation and comment period, and WAPA's responses to those comments. Comments are grouped by subject and paraphrased for brevity.
I. Marketing Plan Term
Comment: Two commenters supported the 20-year contract term for the forthcoming marketing period. WAPA received no comments objecting to the 20-year term.
Response: WAPA appreciates the support. The Final 2028 Plan provides for the marketing of P-DP power from October 1, 2028, through September 30, 2048.
II. Products and Services—Quarterly Energy
Background: WAPA proposed to offer energy amounts for three-month periods (“Quarterly Energy”) based on Reclamation's 24-month generation projection studies (“24-Month Study”), which are released every month.
Comment: Three commenters generally supported WAPA's proposed operational changes in response to challenging hydrology and WAPA's efforts to reduce purchase power activities, as such activities had led to accumulated deficits.
Response: WAPA appreciates the support to change the energy delivery methodology. The Final 2028 Plan will align energy deliveries with actual hydropower generation, thereby decreasing the amount of energy WAPA will have to purchase, reducing financial burdens on contractors, and promoting rate stability.
Comment: Two commenters recommended WAPA consider leaving the majority of the details concerning the implementation of the new operational strategy, such as the final process and operational changes related to estimating, committing, and scheduling the hydropower resource, in the contract and Metering and Scheduling Instructions (MSI), rather than including these details in the Final 2028 Plan to allow the most flexibility to amend agreements as conditions change.
Response: WAPA agrees more detailed terms and conditions regarding Quarterly Energy, Optional Energy, Excess Energy, changes to generation forecasts, minimum scheduling requirements, and other products or services will be addressed, as appropriate, in electric service contracts or MSI, which will be incorporated into such contracts as an attachment. WAPA has added additional language to the Final 2028 Plan to align with this recommendation.
Comment: One commenter expressed concern that WAPA is adopting a Quarterly Energy methodology while simultaneously creating a new resource pool. The commenter further stated that creating a Quarterly Energy methodology admits that the P-DP resource cannot sustain the energy deliveries associated with the allocated capacity.
Response: P-DP's fixed contractual obligation methodology for energy delivery imposed financial burdens on contractors in the existing marketing period. As a result, existing contractors have experienced increased P-DP power rates and incurred deficits for purchase power and wheeling (PPW) expenses. WAPA developed the Final 2028 Plan to provide energy deliveries based on actual generation and to reduce such deficits. WAPA believes the Final 2028 Plan constitutes a balanced approach between maximizing the ongoing value of the P-DP resource to existing contractors and encouraging widespread use with a two-percent resource pool.
Comment: One commenter noted that aligning P-DP energy deliveries with the July 2024, 24-Month Study would have resulted in a 17 percent megawatt hour (MWh) average potential reduction over a 12-month period, with the largest reductions occurring during the highest demand and highest price summer peaking months. This commenter requested that WAPA develop a policy to support full availability of P-DP generation capacity during summer from 3-10 p.m. MST when demand is at its highest and solar resources are waning. The commenter also requested operational measures to make generation available during system emergencies or forecasted peak days so that WAPA may have substantial operational flexibility to support regional reliability.
Response: Thank you for this recommendation. WAPA and Reclamation already collaborate to optimize P-DP generation. WAPA will continue those efforts and will approach Reclamation about options to further optimize the resource.
Additionally, the Final 2028 Plan provides for Optional Energy in which a contractor may elect for WAPA to purchase energy on behalf of the contractor to supplement available P-DP energy, up to the contractor's Contract Rate of Delivery (CROD). This product may help contractors meet their energy requirements during high demand hours. ( print page 89001)
Comment: One commenter expressed concern that Quarterly Energy will affect existing metering and scheduling instructions with its scheduling agent. This entity requested WAPA coordinate with its scheduling agent to ensure any energy delivery changes meet with the agent's approval.
Response: A contractor's entitlement to Quarterly Energy will not be contingent upon approval of a scheduling agent. WAPA is willing to work with the scheduling agent for this contractor, and other contractors as requested, to coordinate Quarterly Energy deliveries.
Comment: Comments expressed support for structuring the P-DP contract more like WAPA's Colorado River Storage Project (CRSP) contracts, with a small replacement power budget to help control future rates. The commenters strongly supported these changes, as they will help mitigate the rate impacts contractors are seeing with the reduction of generation at the dams.
Response: WAPA appreciates the support. Aligning energy deliveries with forecasted generation will mitigate rate impacts and significantly reduce the P-DP purchase power costs.
III. Products and Services—Optional Energy
Comment: One commenter supported the concept of Optional Energy and requested that WAPA develop a plan to meet the commenter's requirements using Optional Energy while minimizing energy purchase costs.
Response: WAPA appreciates the support. WAPA will work with the contractor to provide assistance as requested.
IV. Products and Services—Contractor Use of Transmission
Background: WAPA will allow contractors to use transmission capacity, reserved for delivery of their P-DP firm electric service (FES) allocation, for contractor-owned or contractor-purchased resources. Transmission capacity used for such energy must not exceed a contractor's CROD. As clarified during the public information forum, usage of transmission capacity will be comparable to service under WAPA's Open Access Transmission Tariff (OATT).
Comment: Three commenters supported WAPA's transmission proposal, with one commenter stating that the use of transmission up to CROD is consistent with the use of transmission facilities in other marketing areas.
Response: WAPA appreciates the support.
Comment: One commenter noted that reference to WAPA's OATT suggests divergency from WAPA's traditional practice of pairing an allocation of power with firm transmission rights over WAPA transmission facilities for the delivery of power. WAPA was asked to clarify that such transmission rights remain tied to the allocation and are not severable. Furthermore, the commenter stated the allusion to WAPA's OATT should be clarified to state that firm power customers are not required to separately reserve transmission pursuant to WAPA's OATT. The commenter stated that while WAPA may market transmission capacity excess for the mission of delivering preference power pursuant to the terms and conditions set forth in its safe harbor OATT, the use of transmission capacity associated with the P-DP allocation should remain within WAPA's organic authorities and outside the purview of the Federal Energy Regulatory Commission.
Response: WAPA will continue to utilize existing transmission capacity to deliver energy associated with a contractor's P-DP allocation. Under the Final 2028 Plan, transmission capacity not used by WAPA to deliver a contractor's P-DP allocation will be made available for contractors to deliver contractor-owned or contractor-purchased resources. Contractors will not be required to separately reserve transmission to deliver P-DP energy. When a contractor requests transmission service for contractor-owned or contractor-purchased resources on a transmission path other than that reserved for delivery of P-DP energy, WAPA will study the transmission system to determine availability, comparable to the OATT process for redirecting point-to-point transmission rights.
Comment: A commenter stated that WAPA's decision to create a new resource pool should be delayed until contractors fully understand the impact of how the transmission rights up to CROD are delineated and understood by the contractors.
Response: Transmission capacity used for delivery of contractor-owned or contractor-purchased resources must not exceed a contractor's CROD, regardless of the creation of a resource pool.
V. Application of PMI and Creation of Resource Pool
Background: WAPA proposed to apply the principles of the PMI (10 CFR 905.30-905.37) to P-DP for the forthcoming marketing period. This included a proposal to extend 98 percent of P-DP marketable capacity to existing contractors' CROD and creation of a single, one-time, two-percent resource pool of marketable capacity for new allottees.
Comment: Eight entities provided comments on this proposal. One entity supported the proposal to encourage widespread use. One entity requested a larger resource pool. Two entities opposed creating a resource pool at this time. Four entities preferred no resource pool but supported the small two-percent resource pool to accommodate widespread use. Two of these entities specifically supported WAPA's application of the PMI principles to ensure current contractors continue to receive a substantial amount of their resource. One entity noted its preference that WAPA not create a resource pool, but stated WAPA's proposal of a small, one-time, resource pool appears to be a reasonable compromise to ensure that existing contractors continue to receive most of their existing resources.
Response: WAPA appreciates the feedback.
Comment: One entity opposed using PMI principles because of the significant reduction WAPA is proposing for energy deliveries, along with the impact the capacity reduction may have on this entity's current crediting arrangement.
Response: Application of PMI provides WAPA with a framework for extending a significant portion of existing marketable capacity to existing contractors while also encouraging widespread use. Entities without a Federal hydropower allocation may exist within the P-DP marketing area, and WAPA intends to provide those entities with an opportunity to apply.
The two-percent resource pool will be largely offset by the anticipated addition of capacity from the Davis Dam Unit 3 rewind. Creating a resource pool during drought conditions further reduces energy deliveries to existing contractors. For that reason, WAPA determined to establish a modest resource pool.
WAPA has decided to apply the PMI formula to extend existing contractors' allocation for the Final 2028 Plan consistent with the Proposed 2028 Plan. WAPA recognizes the impact of reducing allocations for existing Tribal contractors with benefit crediting arrangements and is willing to coordinate with scheduling agents, as requested by contractors.
Comment: One commenter opposed reducing existing allocations and recommended creating the resource pool from the additional capacity expected from the rewind of Davis Dam Unit 3 to preserve existing allocations. ( print page 89002) The commenter further stated that WAPA markets power consistent with sound business principles and therefore must weigh the benefit of creating small allocations (one kW) versus the cost that may be incurred if existing crediting arrangements are impacted by the withdrawal.
Response: WAPA appreciates the alternative idea. However, WAPA believes that the PMI formula, established through an extensive public process and commonly applied by WAPA in marketing plans across its territory, remains an effective methodology in the context of P-DP. WAPA recognizes the impact of reducing allocations for existing contractors with benefit crediting arrangements and is willing to coordinate with scheduling agents, as requested by contractors.
WAPA recognizes that small allocations may not be cost effective for every potential new contractor because associated energy is currently less than optimal. Each potential contractor will need to evaluate the cost effectiveness of the resource before entering into a contract with WAPA.
WAPA believes its decision to apply PMI and the other components of its Final 2028 Plan are in accordance with its statutory obligation to offer the lowest possible rates consistent with sound business principles.
Comment: A commenter that is not an existing P-DP contractor, but is located in the P-DP marketing area, requested that the resource pool be formed from a larger percentage of current allocations because if numerous or large preference entities apply, it would create an inequity between earlier applying parties who would keep 98 percent of their allocations, and later applying preference entities who would have to share two percent of the project's surplus power.
Response: WAPA interprets this commenter's reference to “surplus power” to mean marketable resource from the resource pool. WAPA is sensitive to the current hydrological conditions that exist in the Colorado River Basin. Under the existing P-DP marketing plan, energy allocations are a fixed seasonal amount for the length of contracts, regardless of hydroelectric generation (49 FR 50582, 50587; 68 FR 23709). Due to challenging hydrological conditions in the Colorado River Basin, this methodology imposed financial burdens on existing contractors during the current marketing period, as WAPA has been required to purchase significant amounts of power to meet contractors' firm energy requirements. For the Final 2028 Plan, WAPA will eliminate this methodology and instead offer energy amounts based on hydroelectric generation forecasts. A WAPA analysis using Reclamation's July 2024, 24-Month Study showed an approximate 17 percent reduction to energy deliveries to existing contractors over a 12-month period, with an even greater impact in the summer months when energy in the Southwest is needed most. This analysis was included in WAPA's responses to clarifying questions and can be found on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.
WAPA had to find a balance between encouraging widespread use and providing valuable energy deliveries. The two-percent resource pool would be largely offset by an anticipated increase in capacity resulting from the rewind of Davis Dam Unit 3. However, that additional capacity will not increase energy deliveries during current hydrological conditions. Because WAPA is sensitive to concerns over challenging hydrological conditions and reduced energy deliveries, it is extending 98 percent of marketable capacity to existing contractors in the Final 2028 Plan. WAPA believes a modest, two-percent resource pool is still a reasonable means of encouraging widespread use.
Comment: One commenter opposed the creation of a resource pool stating that with the loss of roughly 25 percent of energy deliveries since the execution of the last contracts, there is little additional energy for a new resource pool. The commenter stated the impacts to the creation of a new resource pool need to be assessed, and further stated that WAPA is asking existing contractors to make additional sacrifices at a point in time in which DSW has been unable to meet the CROD. The commenter stated that although WAPA indicates that capacity allocations for new contractors will be made from new capacity associated with a turbine rewind, there is an absence of associated energy for a new allocation.
Response: WAPA concurs that challenging hydrological conditions have reduced the energy output of P-DP generators since 2008. To clarify the comment, during the current marketing period, as P-DP energy production decreased, WAPA maintained CROD and associated energy through market purchases. As a result, existing contractors experienced rate increases, but no decrease in energy deliveries. As part of the Final 2028 Plan, contractors will be entitled to energy deliveries based on their pro rata share of projected hydrogeneration. WAPA recognizes the two-percent resource pool impacts existing contractors' CROD and resulting energy delivery. WAPA balanced the marketing of a limited and valuable resource with its obligation to encourage widespread use of the Federal resource. Given recent hydrology, and knowing that potential new contractors may exist, WAPA has decided to create a modest, two-percent resource pool, which some commenters have indicated is small. Marketable capacity is expected to increase with the addition of approximately 3,750 kW from the Davis Dam Unit 3 rewind, which will largely offset the capacity set aside for the resource pool. Energy deliveries are directly attributable to water releases and are constrained by the current hydrological conditions. WAPA assessed the impacts of creating a resource pool, along with changes using the Quarterly Energy methodology. The results are posted on WAPA's website as part of its responses to clarifying questions and show potential P-DP Quarterly Energy projections by contractor, including with the two-percent resource pool, using July 2024, 24-Month Study data.
Comment: A commenter opposed creation of the resource pool at this time because it argued that adopting the Quarterly Energy methodology while simultaneously proposing a new resource pool presents a conflict. According to the commenter, the creation of a Quarterly Energy methodology admits that the P-DP resource cannot sustain the energy deliveries associated with the allocated capacity.
Response: Given challenging hydrology, WAPA designed the Quarterly Energy product to achieve alignment with actual generation and to address the significant costs of purchase power. WAPA chose a modest resource pool size to reflect the reduction in hydrogeneration while encouraging widespread use.
Comment: A commenter explained it opposes creation of a resource pool based on WAPA eliminating the current off peak requirements and instead requiring minimum schedule requirements to coincide with water deliveries. The commenter stated this could lead to purchases at times when the resource is out of the market and at a point in time when it would not be as economic to the contractors to receive the power. With potential loss of value against the decision to create a new resource pool, this commenter suggested that WAPA refrain from creating the new resource pool until the actual impacts associated with the new scheduling regime have been disclosed and discussed with the contractors. ( print page 89003)
Response: WAPA does not believe there is a direct correlation between the decision to establish a resource pool and minimum scheduling requirements. Furthermore, it is not feasible to delay the resource pool determination.
WAPA is developing a tool to optimize scheduling requirements to reduce WAPA's purchase power requirements and minimize energy sales in low load hours. The tool will create minimum requirements that are based on actual limitations around the resource. The process to develop the tool will take time, but WAPA believes having a collaborative approach and providing contractors the opportunity to help shape the results will provide the best possible outcome. Prior to the execution of contracts for the 2028-2048 marketing period, WAPA will provide examples of methods being considered, seek feedback from existing contractors and potential new allottees, and select which option provides the greatest flexibility and achieves the goals identified in the Final 2028 Plan. Minimum scheduling requirements will be included in the MSI.
Comment: A commenter opposed creation of a resource pool because if WAPA is eliminating the scheduling flexibility and requiring contractors to purchase power at times when it is not economic, WAPA is not following its principle to set rates at the lowest possible rate consistent with sound business principles. The commenter states WAPA is allocating capacity, resources, and energy to new contractors at a time when WAPA does not have the full resources to meet contract rates of delivery, thus creating a situation in which existing allottees are being deprived of the value of the resource. To the extent that WAPA reduces energy allocations, the commenter stated contractors with longstanding allocations are forced to seek higher-cost replacement energy, and the record to date does not explain how promoting widespread use ensures that the power is sold at the lowest possible cost. The commenter also stated that the Federal Register notice fails to reconcile this proposed departure from the longstanding policy of keeping rates as low as possible, consistent with sound business principles, with an increased dilution of the resource under the guise of promoting widespread use of the power.
Response: WAPA believes that by changing the minimum scheduling requirements and developing the Quarterly Energy product, WAPA will be marketing power in alignment with its obligation to provide the lowest possible rates consistent with sound business principles, especially given the challenging hydrological conditions in the Colorado River Basin and the agency's obligation to encourage widespread use. Extending the benefit of Federal hydropower to new potential contractors who do not have an existing Federal hydropower allocation encourages widespread use with minimal impact to WAPA's rates.
Comment: A commenter provided further reasoning for opposing the resource pool at this time because there needs to be an understanding in terms of the flexibility of the transmission rights up to CROD, and decisions on creating a new resource pool should also be held until the customers fully understand the impact of how the transmission rights up to CROD are delineated and understood by the customers.
Response: WAPA has defined the transmission use it intends to provide to contractors. WAPA discerns no reason to delay its determination to create a resource pool.
Comment: A commenter noted that the impact from the creation of the resource pool is isolated to those contractors who are not Priority Use Power (PUP) contractors, and the new resource pool would not reduce capacity or energy deliveries to contractors who receive PUP. The commenter did not oppose any change to allocations for PUP or any change in those operations for PUP contractors.
Response: A portion of P-DP capacity and energy is first reserved for PUP requirements and remaining marketable capacity is marketed by WAPA as FES. Therefore, PUP capacity and energy allocations will not be reduced with the creation of the resource pool as part of the Final 2028 Plan.
VI. Eligibility Criteria for Resource Pool Allocations
Background: Qualified applicants must not have an existing allocation of Federal power or be a member of a parent entity that has an allocation of Federal power.
Comment: WAPA received comments in support of limiting resource pool eligibility to those who do not have other Federal hydropower allocations.
Response: WAPA appreciates the support.
Comment: WAPA received comments from three entities requesting that the eligibility criteria be changed to allow those with existing Boulder Canyon Project (BCP) and/or CRSP Federal hydropower allocations to be eligible for a P-DP allocation from the 2028 resource pool.
Response: WAPA chose to create a two-percent resource pool at a time when drought is already reducing P-DP energy production. Existing contractors have experienced rate increases and PPW deficits because P-DP generation could not meet contractual requirements. WAPA determined that limiting eligibility for resource pool allocations to those entities that do not already have a Federal power allocation is an appropriate means of encouraging widespread use, while the modest size of the resource pool also recognizes the strains on the P-DP resource and existing contractors.
Comment: One commenter requested WAPA consider adjusting the proposed eligibility criteria language to “Qualified applicants must not have a significant allocation of Federal power . . .” to not disqualify small electric utilities that currently receive a small BCP Federal power allocation from being considered as a 2028 P-DP qualified applicant.
Response: Given that Federal hydropower is a finite resource in the Southwest, WAPA considers all allocations to be beneficial and significant. In WAPA's view, determining a threshold at which an allocation is “significant” is not possible, and could not be accomplished in an equitable manner. WAPA's policy is to encourage widespread use of P-DP power at the lowest rates possible consistent with sound business principles. Adhering to the proposal to limit the resource pool eligibility to those entities without an existing Federal power allocation accomplishes both goals.
Comment: A commenter noted that WAPA is proposing that its resource pool allocations be returned to existing contractors if enough new preference customers are not found. The commenter requested that WAPA should reconsider this option and allow for additional qualified applicants that may have a small share of existing Federal power resources to be considered in lieu of returning the unused allocation pool back to the existing P-DP contractors.
Response: As discussed previously, WAPA considers all allocations to be beneficial and significant. WAPA created the two-percent resource pool to encourage widespread use at a time when it is experiencing challenging hydrological conditions. Granting resource pool allocations to entities that already have a Federal power allocation does not encourage widespread use to the same extent as making allocations to entities without an existing allocation. Returning the resource pool power to existing P-DP contractors if new ( print page 89004) preference contractors are not found recognizes the resource strains on existing contractors. WAPA's decision is also consistent with the framework set forth in the PMI, which provides, “[i]f power is reserved for new customers but not allocated, or resources are offered but not placed under contract, this power will be offered on a pro rata basis to customers that contributed to the resource pool through application of the extension formula in [10 CFR] 905.33.” 10 CFR 905.32(e)(1).
Comment: One commenter asked if it is a new requirement that qualified applicants must not have an existing allocation of Federal power or be a member of a parent entity that has an allocation of Federal power. Two commenters noted that at least one of WAPA's current FES allocation contractors obtained Federal power from more than one Federal source. A commenter located in the P-DP marketing area with a CRSP allocation stated that this eligibility requirement seems to be an inequity and a bias against later applying preference customers, as well as a violation of the widespread use mandate.
Response: WAPA's eligibility criterion is not new. The EPAMP Final Rule, published October 20, 1995, provided a framework for the marketing of power while also allowing for project-specific approaches to be used during future proceeding and marketing plan development. The Final Rule noted, “[i]n the past, [WAPA] has allowed preference entities to receive power from more than one project when marketing areas overlap. Given the significant new customer load that exists in portions of [WAPA]'s service territory, [WAPA] is not willing to continue this policy on a [WAPA]-wide basis. On this issue, [WAPA] will retain the flexibility set forth in the proposed Program. An existing customer will not be eligible to receive power from a resource pool unless [WAPA] provides otherwise on a project-specific basis. Comments on the eligibility of existing customers to receive resource pool power will be accepted as part of the project-specific public process” (60 FR 54151, 54163).
Given the hydrological conditions impacting P-DP generation, it is prudent for WAPA to maintain that existing Federal power contractors will not be eligible to receive P-DP power from the resource pool.
Comment: One commenter requested that if there are fewer applicants than can equitably use the resource pool, then the unallocated power be shared among all customers.
Response: WAPA interprets this comment to mean that unallocated power be shared among all resource pool applicants and existing contractors. WAPA has wide discretion to balance relative amounts of load being served by Federal hydropower as part of establishing the resource pool. WAPA's goal is to find applicants that meet the eligibility criteria up to the two percent.
Comment: A Tribe with an existing CRSP Federal hydropower allocation commented that it considers its ability to receive allocations and Federal hydropower resources (generation and transmission systems) to be trust resource under the DOE definitions and related to the construction of Coolidge Dam. Although the Tribe has a CRSP allocation, it requested the ability to apply for an allocation of P-DP power as well.
Response: WAPA's power marketing authority is defined by Reclamation law, which grants the agency-wide discretion as to who and under what terms it will contract for the sale of Federal power. While WAPA will create a modest resource pool to encourage widespread use, it also chose to limit applicant eligibility for the resource pool because P-DP energy has been limited in recent years due to drought conditions. WAPA believes expanding resource pool eligibility to entities already holding a Federal power allocation would not encourage widespread use given current conditions.
Although there is no federal legislation requiring WAPA to expand its eligibility criteria to make the Tribe eligible for a P-DP resource pool allocation, WAPA notes the San Carlos Irrigation Project, owned and operated by the Department of Interior, Bureau of Indian Affairs, is an existing P-DP contractor and is required by Federal law to provide power to the Tribe.[1] WAPA values its relationships with tribal preference customers and understands the challenges the Tribe faces in obtaining affordable electric service. WAPA is willing to further collaborate with the Tribe and the Bureau of Indian Affairs in addressing these challenges.
VII. General Criteria and Contract Principles—Minimum Scheduling Requirements
Background: P-DP contractors will have a new minimum scheduling requirement that aligns with Reclamation's generation schedule and how energy is scheduled within the Western Interconnection. Please also see comments and responses under V. Application of PMI and Creation of Resource Pool regarding implementing minimum scheduling requirements at the same time as creating a resource pool.
Comment: One commenter noted that the details regarding minimum scheduling requirements are unclear and requested WAPA ensure that changes are coordinated with its scheduling agent and are acceptable to all parties.
Response: WAPA will collaboratively develop the minimum scheduling requirements tool with contractors and is willing to coordinate changes with scheduling agents, as requested by contractors.
Comment: A commenter supported changing minimum scheduling requirements to provide scheduling flexibility, reduce purchase power costs, and minimize sales in low load hours. The commenter questioned how changing minimum scheduling requirements to meet water requirements will affect schedules and noted that it appears that this impact has not been fully examined by DSW personnel. The commenter stated that removing the 25 percent off peak minimum could improve resource availability but remains uncertain as to how that change will benefit contractors. The commenter asks WAPA to improve transparency regarding scheduling requirements and operational needs.
Response: WAPA is developing a tool to identify contractor minimum schedules needed to meet Reclamation water release requirements. When P-DP contractors schedule less energy than Reclamation generates, WAPA may need to sell P-DP energy to balance hourly loads and resources. WAPA intends to produce an hourly minimum schedule each month for each contractor. The change will benefit P-DP contractors by reducing sales of short-term surplus energy when such energy could have been delivered to P-DP contractors and will decrease potential WAPA purchases in more expensive hours to replace generation that was sold. Selling generation and replacing it with purchases in more expensive hours increases the purchase power requirement for the project. Consequently, there is a direct relationship between potential scheduling flexibility and the need for purchase power. WAPA intends to collaborate with contractors when identifying levels of purchase power to align with contractors' preference for scheduling flexibility.
Comment: A commenter stated that the proposal does not indicate any ( print page 89005) limits to the amount of off peak power that would have to be required and could lead to a further diminishment of the value of the P-DP resource by eliminating scheduling flexibility and requiring contractors to purchase power at times when it is non-economic.
Response: P-DP generation is based on Reclamation water release requirements. WAPA will continue to coordinate with Reclamation to optimize generation timing and intends to work out a collaborative solution with contractors during negotiations of electric service contracts and the MSI. WAPA received requests specifically asking WAPA to reserve the details of operational changes to the MSI and contracts.
Comment: A commenter requested WAPA confirm that, although the scheduling may evolve to a more dynamic model, WAPA will provide suitable advance notice for contractors to schedule the resource for maximum benefit.
Response: WAPA agrees that it is beneficial for all parties to receive suitable advance notice for scheduling parameters. Minimum scheduling requirements will be included in the MSI.
Comment: One commenter stated that as WAPA reserves the right to enter exchange transmission service and other related agreements, such reservation of authorities should also include WAPA's discretion to manage its interconnection queue to meet these objectives.
Response: Thank you for this recommendation.
Comment: One commenter acknowledged that P-DP generation is based on Reclamation water orders and asked, to the extent possible, for increased flexibility to provide peak shaving in the summer and to avoid competing with solar resources.
Response: WAPA appreciates the recommendation. WAPA acknowledges that the energy market has changed with the increase in solar resources and there are times when P-DP energy is more valuable to contractors. WAPA will continue to stay engaged in the energy market and will collaborate with Reclamation to optimize generation dispatch within water release requirements.
VIII. General Criteria and Contract Principles—Renewable Energy Certificates
Background: Renewable energy certificates (RECs) associated with P-DP power will be made available to contractors and may be sold or transferred to third parties, provided such sale or transfer is consistent with WAPA policy and documented in electric service contracts. As stated in the responses to clarifying questions posted on WAPA's website, it is WAPA's intention that P-DP RECs will be made available to contractors with similar flexibility offered to BCP contractors; however, the end result for P-DP will need to be consistent with WAPA policy.
Comment: Two commenters supported WAPA's RECs proposal and requested WAPA to make its RECs policy available as soon as practicable and before P-DP contract negotiations.
Response: WAPA is currently working on changing its RECs policy and is attempting to achieve resolution as soon as possible.
Comment: One commenter strongly supported WAPA's RECs proposal to help mitigate rate impacts from generation reductions. WAPA was asked to consider using similar language as that used in the BCP contracts when drafting P-DP RECs language to ensure contractors receive the “environmental benefits” of hydropower.
Response: WAPA appreciates this recommendation and agrees that language from the BCP electric service contracts may be appropriate for use in the P-DP contracts, consistent with WAPA policy and project-specific legal authorities.
IX. General Criteria and Contract Principles—Undepreciated Replacement Advances
Background: Consistent with the current P-DP Advancement of Funds contract, new allottees would be required to reimburse existing contractors for undepreciated replacement advances, to the extent existing contractors' allocations are reduced as a result of creating the resource pool.
Comment: WAPA received comments from three entities supporting the requirement for new allottees to reimburse existing contractors for undepreciated replacement advances. Additionally, commenters stated it is imperative that potential new allottees understand that a P-DP allocation includes responsibility for their portion of the undepreciated replacement advances and understanding how the deferred purchase power repayments could impact their future rates. The commenters noted these issues could severely change a potential new contractor's decision to sign the contract, especially benefit crediting contractors.
Response: WAPA appreciates the supportive comments. It is accurate that new potential allottees need to consider all costs associated with a P-DP allocation, including their share of undepreciated replacement advances. WAPA agrees that it is prudent for new allottees to evaluate the costs and value associated with a P-DP allocation, especially if a bill crediting or benefit crediting partnership will be required. WAPA would like to clarify that, as stated in its proposal and in the Final 2028 Plan, deficits incurred during the current marketing period will not be passed through to new allottees in the forthcoming marketing period. Such deficits include purchase power deficits.
X. General Criteria and Contract Principles—Deficit Repayment
Background: Deficits for costs incurred during a previous marketing period will not be passed through to new allottees.
Comment: One commenter stated that a portion of the current period deficit should be repaid by future potential allottees under the new resource pool since purchase power expenses were accumulated in connection with the rewind at Davis Dam and purchase power costs related to that outage should not be solely borne by the existing allottees.
Response: PPW deficits were incurred from fiscal years 2018-2023 when challenging hydrological conditions were experienced at the same time as numerous variables affecting the energy market, resulting in higher than anticipated P-DP purchase power costs. New potential contractors will have a different energy product than existing contractors, and WAPA's ability to level PPW costs in rates does not mean that future contractors should pay for annual expenses from the prior marketing period.
It is accurate that the Davis Dam Unit 3 rewind requires a unit outage and results in reduced capacity during the current marketing period. However, there is not a reduction to energy resulting from the outage because Reclamation dispatches the same amount of generation to maintain water releases. The impact to existing contractors is not an overall reduction in energy, but is from the timing of purchases, to the extent WAPA needs to buy power due to capacity shortages in higher priced hours. Existing contractors will experience the benefit of WAPA retaining the additional capacity for the remainder of the current marketing period and that additional capacity could help defer power purchases in high demand hours. To quantify the estimated PPW costs associated with this Davis Dam Unit 3 ( print page 89006) outage, WAPA would need to conduct a post-hoc analysis to determine when WAPA may or may not have purchased or sold power in various hours. Such analysis would be speculative and hypothetical. Therefore, WAPA believes that a balanced approach is to not pass such outage-related PPW expenses onto potential new contractors, but rather WAPA may use the unallocated, additional capacity from the rewind for the remainder of the current marketing period to help offset PPW expenses incurred during maintenance on the unit, thereby benefitting existing contractors.
XI. Changes in the Electric Utility Industry
Comment: Two commenters noted expansion of markets in the West and requested WAPA to include contract language to protect the value of P-DP to enable WAPA's contractors to use the resource in current and future energy markets. Some of the examples provided in which WAPA has worked with contractors included use of RECs, dynamic signals, and pseudo-ties. The commenters requested language to allow technical solutions for changing market dynamics in the future.
Response: WAPA appreciates this comment. WAPA will work with contractors to include language in contracts to protect the value of contractors' Federal hydropower resources in the event WAPA joins a market.
Comment: A Tribe requested government-to-government consultation if WAPA continues forward with participation in SPP.
Response: WAPA interprets this comment's reference to SPP as the Southwest Power Pool (SPP). WAPA appreciates this request and comment. Currently, DSW does not intend to participate in the SPP regional transmission organization or expand current market participation with SPP. DSW will engage in government-to-government consultation in the event changes to current market participation are contemplated.
XII. Additional Comments
Comment: Commenters expressed appreciation for the effort and careful thought that WAPA put into this process; WAPA's effort to preserve the existing contractors' allocations and provide a more workable construct for future rates; WAPA's deliberate approach to the 2028 marketing plan; and WAPA recognizing the impact of drought on hydropower generation.
Response: WAPA appreciates the support and engagement throughout this process.
Summary of Revisions to the Proposed Plan
WAPA revised the Proposed 2028 Plan as a result of the comments received during the consultation and comment period and public forums. Revisions have been made to define the intent of the marketing plan more clearly; the revisions do not alter the substance of the original proposal. The revisions are summarized as follows:
WAPA was asked to clarify the meaning of “prescheduling” regarding prescheduling timetables for Quarterly Energy, Optional Energy, and generation forecast changes to Quarterly Energy. WAPA provided a response to this clarifying question on its website during the consultation and comment period. WAPA modified references to “prescheduling” in the Proposed 2028 Plan to “day-ahead prescheduling” in the Final 2028 Plan for enhanced clarity.
In response to recommendations that WAPA leave the majority of details concerning the implementation of the new operational strategy, such as the final process and operational changes related to estimating, committing, and scheduling the hydropower resource, in the contract and MSI, WAPA has added language in the Final 2028 Plan to indicate that additional details will be addressed, as appropriate, in FES contracts or MSI, which will be incorporated into such contracts as an attachment.
The Proposed 2028 Plan stated that WAPA expected the addition of 3,750 kW of capacity resulting from the rewind of Davis Dam Unit 5. The unit number was incorrect; the rewind will occur at Davis Dam Unit 3. WAPA has made this correction in the Final 2028 Plan.
The Final 2028 Plan clarifies that “approximately” 3,750 kW of additional marketable capacity is expected to be available as a result of the rewind of Davis Dam Unit 3. The modification was necessary because the rewind is not yet complete, and the actual capacity gains from the rewind cannot be determined until the project is complete.
The Final 2028 Plan clarifies that WAPA will allow contractors to use transmission capacity, reserved for delivery of their P-DP FES allocation, for “contractor-owned or contractor-purchased resources.” The Proposed 2028 Plan used the term, “contractor-owned or -purchased resources.”
The Final 2028 Plan also clarifies that transmission used for contractor-owned or contractor-purchased resources will only be available to contractors after minimum scheduling requirements for P-DP generation have been met.
Finally, the Final 2028 Plan fixes an error in the statutory citation for Section 9(c) of the Reclamation Project Act. The correct citation is 43 U.S.C. 485h(c).
Final 2028 Plan
The Final 2028 Plan provides new power marketing criteria for Parker-Davis Project (P-DP). The Final 2028 Plan addresses: (1) the power to be marketed after September 30, 2028, which is the termination date for all existing P-DP firm electric service (FES) contracts; (2) the general terms and conditions under which the power will be marketed starting on October 1, 2028, and going through September 30, 2048; and (3) the criteria to determine eligibility for allocations from the resource pool.
Within broad statutory guidelines and operational constraints of P-DP, WAPA has wide discretion as to whom and under what terms it will contract for the sale of Federal power, if preference is accorded to statutorily defined entities. WAPA markets power in a manner that will encourage the most widespread use at the lowest possible rates consistent with sound business principles. All products and services provided under this Final 2028 Plan will be subject to the operational requirements and constraints of the P-DP, transmission availability, purchase power limitations, and Federal authorities. WAPA will continue a collaborative process in implementing the terms set forth in this Final 2028 Plan.
I. Marketable Power Resource
The primary purpose of P-DP is water control and delivery. The water control system consists of storage reservoirs that provide daily, seasonal, and annual flow regulation. Power generated from these resources depends on hydrology and water operation requirements.
Some of the power generated by P-DP is reserved for priority use by the United States (herein referred to as “Priority Use Power” or “PUP”). PUP is capacity and energy required for the development and operation of Reclamation projects as required by legislation (Reclamation project use power), and irrigation pumping on certain Indian lands. Reclamation project use power is defined to mean that capacity and energy for Reclamation projects in the Lower Colorado River Basin. The following is a list of facilities and projects for which Reclamation project use power is reserved: relift and drainage pumps; ( print page 89007) construction campsites; the Yuma-Mesa Irrigation and Drainage District; Gila Project drainage pumps; Wellton-Mohawk Irrigation and Drainage District Plant Nos. 1, 2, and 3; and the Colorado River Front Work and Levee System. Power for irrigation pumping on certain Indian lands is defined to mean capacity and energy for use in irrigation pumping on Indian irrigation projects which are adjacent to the Lower Colorado River south of Davis Dam and north of the border between the United States and Mexico.
P-DP power in surplus to that reserved for PUP shall be reserved for allocation to existing contractors and a resource pool shall be offered to potential new contractors, consistent with applicable law and the terms and conditions provided herein. Power that is reserved as PUP, but not presently needed, also may be marketed to contractors as withdrawable power. Withdrawable power is power that can be withdrawn for Reclamation project use power and power for irrigation pumping on Indian lands, which shall have equal priority. When PUP is requested, WAPA will confirm that the power to be withdrawn will be used for the above specified purposes, and then will withdraw the necessary amount of PUP upon a two-year advance notice. Withdrawals of power will be made as requested and confirmed until the total amount of power reserved for priority use purposes is in use.
II. Products and Services
WAPA will market a fixed amount of capacity, referred to as Contract Rate of Delivery (CROD), for summer and winter seasons. WAPA will have at least 259,206 kW of marketable capacity in the summer and at least 198,337 kW of marketable capacity in the winter, beginning October 1, 2028, with an expected capacity increase of approximately 3,750 kW resulting from a rewind of Davis Dam Unit 3. The summer season for any calendar year is the seven-month period beginning the first day of P-DP's March billing period and continuing through the last day of its September billing period. The winter season is the five-month period beginning the first day of P-DP's October billing period and continuing through the last day of its February billing period in the next succeeding calendar year.
Under the existing P-DP marketing plan, energy allocations are a fixed seasonal amount for the length of customers' contracts and are equal to 3,441 kWh/kW, a 67 percent capacity factor, in the summer season, and 1,703 kWh/kW, a 47 percent capacity factor, in the winter season (49 FR 50582, 50587; 68 FR 23709). Due to challenging hydrological conditions in the Colorado River Basin, this methodology has imposed increasing financial burdens on contractors during the current marketing period, as WAPA has been required to purchase significant amounts of power to meet contractors' firm energy requirements. Accordingly, WAPA will eliminate this methodology and instead offer energy amounts for three-month periods (“Quarterly Energy”) based on Reclamation's 24-month generation projection studies (“24-Month Study”), which are released every month. The Quarterly Energy will be published for contractors by no later than the last day of August for October through December, the last day of November for January through March, the last day of February for April through June, and the last day of May for July through September, of each year during the marketing period. This will allow for energy deliveries to be aligned with actual generation. Under the Final 2028 Plan, available generation, less PUP (which will be fixed on the same terms as under the existing marketing plan), will be published for contractors in the form of Quarterly Energy based on a pro rata share of their seasonal CROD. Details for Quarterly Energy will be further outlined, as appropriate, in FES contracts or Metering and Scheduling Instructions (MSI), which will be incorporated into such contracts as an attachment.
WAPA will purchase energy on behalf of contractors to supplement projected hydropower generation (“Optional Energy”), if requested. Contractors must elect to purchase Optional Energy from WAPA no later than the day before day-ahead prescheduling takes place. The amount of Optional Energy requested, combined with the contractor's monthly energy entitlement pursuant to its Quarterly Energy, must not exceed the contractor's CROD scheduled at a hundred percent capacity factor (contractor's CROD multiplied by twenty-four hours multiplied by the number of days in the month). An estimated monthly price for Optional Energy will be published by WAPA at least quarterly but may be revised and re-published as conditions dictate. The actual costs associated with Optional Energy purchased by WAPA will be passed through to the contractor who elects to receive it. Details for Optional Energy will be further outlined, as appropriate, in FES contracts or MSI, which will be incorporated into such contracts as an attachment.
There may be instances, after Quarterly Energy has been published, that Reclamation makes significant reductions to generation projections. For example, sustained periods of precipitation and/or run off from water sources other than the Colorado River can result in water being stored in Lake Mead for later use, thereby reducing P-DP generation. To minimize power purchases resulting from these situations, WAPA will revise contractors' monthly energy entitlements when significant generation reductions occur after Quarterly Energy has been published. A significant reduction in generation will occur when dollars associated with projected purchase power requirements needed to maintain the Quarterly Energy for a particular month exceed dollars associated with that month's portion of WAPA's Annual Purchase Power Projection. The Annual Purchase Power Projection is an annual estimate of what power WAPA will purchase in the upcoming fiscal year, from October 1 through September 30. Currently, WAPA's Annual Purchase Power Projection is used as a component of the P-DP firm electric service (FES) rate. When such significant reductions occur, WAPA will publish contractors' revised energy for the month using the reduced generation projections. Revised energy will continue to be based on a pro rata share of contractors' CROD and will be effective no later than one day prior to day-ahead prescheduling. Contractors may request that WAPA purchase Optional Energy on their behalf per the terms described above to obtain energy following a revision.
WAPA will designate the portion of projected annual generation exceeding a kWh calculation of all projected marketable capacity (including PUP) multiplied by a 67 percent capacity factor in the summer season and 47 percent capacity factor in the winter season as “Excess Energy.” If the current 24-Month Study generation projection for a year exceeds the result of the capacity factor calculation described above, energy exceeding that calculation (Excess Energy) will be distributed to all contractors and PUP recipients based on a pro rata share of their seasonal CROD. Excess Energy will be distributed to contractors monthly and included as an addition to each contractor's Quarterly Energy. Excess Energy will be subject to the same rate and payment requirements as other available P-DP hydropower. The 24-Month Study yearly projections could show Excess Energy at the beginning of a year, but such Excess Energy may not remain at originally projected levels for the full year. Excess Energy distributed ( print page 89008) in part of a year may be subject to adjustment in subsequent months if the 24-Month Study yearly generation projection drops below the Excess Energy threshold later that year. WAPA will establish procedures for designating and adjusting Excess Energy in MSI, which will be incorporated into the electric service contracts, to minimize subsequent energy adjustments as much as possible. Additional details for Excess Energy will be outlined, as appropriate, in FES contracts or MSI.
WAPA also will allow contractors to use transmission capacity, reserved for delivery of their P-DP FES allocation, for contractor-owned or contractor-purchased resources, after hourly minimum scheduling requirements have been met. Transmission capacity used for such energy must not exceed a contractor's CROD.
III. Resource Extensions and Resource Pool Allocations
WAPA will apply the principles of the Power Marketing Initiative (PMI) (10 CFR 905.30 through 10 CFR 905.37) to P-DP for the forthcoming marketing period. WAPA will extend 98 percent of P-DP marketable resource as of September 30, 2028, to existing contractors' CROD, for an additional 20 years, from October 1, 2028, through September 30, 2048. The existing CROD for PUP contractors will remain unchanged. WAPA will establish a single, one-time resource pool of two percent of P-DP marketable capacity for new allottees. Energy associated with the new resource pool will be based on a pro rata share of the allottee's seasonal CROD and published in the form of Quarterly Energy. Specific terms and conditions governing the extensions and resource pool are described below.
A. Extension for Existing Contractors
WAPA will have at least 259,206 kW of marketable capacity in the summer and at least 198,337 kW of marketable capacity in the winter, beginning October 1, 2028. WAPA expects an addition of approximately 3,750 kW of capacity resulting from the rewind of Davis Dam Unit 3, anticipated to be available in July 2025 or earlier. The actual marketable capacity for the forthcoming marketing period will be adjusted to include the final Davis Dam Unit 3 capacity increase.
WAPA will extend existing contractors' allocations using the formula contained in the PMI: “Customer Contract Rate of Delivery (CROD) today/total project CROD under contract today × project-specific percentage × marketable resource determined to be available at the time future resource extensions begin = CROD extended” (10 CFR 905.33(a)). The creation of a resource pool will not affect PUP customers' CROD.
In the event any existing contractors forfeit or express an intention not to extend some or all of their allocations prior to October 1, 2028, such resources will be returned to the other existing contractors on a pro rata basis.
B. Resource Pool Allocations
WAPA will establish a resource pool by reserving a portion of the power available during the forthcoming marketing period for allocation to new, eligible preference entities, or returned to existing contractors if enough new preference contractors are not found. Allocations for the resource pool will be determined through a separate public process as described under Call for Resource Pool Applications herein.
The 2028 resource pool will consist of two percent of the marketable resources available beginning October 1, 2028. When reducing existing allocations to create the resource pool, WAPA will first take energy from existing contractors' withdrawable allocations up to the total reduction, when available. The remaining reductions will come from nonwithdrawable energy.
C. Eligibility Criteria for Resource Pool Allocations
WAPA will apply the following Eligibility Criteria to all applicants seeking a resource pool allocation under the new marketing plan.
1. Qualified applicants must meet the preference requirements under Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), as amended and supplemented.
2. Qualified applicants will be located within the P-DP marketing area that includes: (1) all of the drainage area considered tributary to the Colorado River below a point one mile downstream from the mouth of the Paria River (Lees Ferry); (2) the State of Arizona, excluding that portion lying in the Upper Colorado River Basin; (3) that portion of the State of New Mexico lying in the Lower Colorado River Basin and the independent Quemada Basin lying north of the San Francisco River drainage area; (4) those portions of the State of California lying in the Lower Colorado River Basin and in drainage basins of all streams draining into the Pacific Ocean south of Calleguas Creek; and (5) those parts of the States of California and Nevada in the Lahontan Basin including and lying south of the drainages of Mono Lake, Adobe Meadows, Owens Lake, Amargosa River, Dry Lakes, and all closed independent basins or other areas in southern Arizona not tributary to the Colorado River.
3. Qualified applicants must not have an existing allocation of Federal power or be a member of a parent entity that has an allocation of Federal power.
4. Qualified applicants, except Native American tribes, must be ready, willing, and able to receive and distribute or use power from WAPA. Ready, willing, and able means that the potential allottee has the facilities needed for the receipt of power or has made the necessary arrangements for transmission and/or distribution service; and the potential allottee's power supply contracts with third parties permit the delivery of WAPA power.
5. Qualified applicants that desire to purchase power from WAPA for resale to consumers, including cooperatives, public utility districts, public power districts and municipalities, must achieve electric utility status and have necessary arrangements for transmission and/or distribution service in place by January 31, 2028. Native American tribes are not subject to this requirement. Electric utility status means the applicant has responsibility to meet load growth, has a distribution system, and is ready, willing, and able to purchase P-DP Federal power from WAPA on a wholesale basis for resale to retail customers.
6. Qualified Native American applicants must be a Native American tribe as defined in the Indian Self Determination Act of 1975 (25 U.S.C. 5301, et seq., as amended or supplemented).
7. Qualified applicants must apply in response to the Call for Resource Pool Applications, as described in the Call for Resource Pool Applications section herein. Completed applications must be received by WAPA within the time required in the DATES section.
D. Allocation Criteria for Resource Pool Allocations
WAPA will apply the following Allocation Criteria to all applicants seeking a resource pool allocation under the new marketing plan.
1. Allocations will be made in amounts as determined solely by WAPA in exercise of its discretion consistent with its governing authorities and considered to be in the best interest of the United States.
2. Allocations will be based on the applicant's load during the calendar year prior to the Call for Resource Pool Applications or the amount requested, whichever is less.
3. WAPA will base allocations made to Native American tribes on the actual ( print page 89009) load experienced during the calendar year prior to the Call for Resource Pool Applications or the amount requested, whichever is less. WAPA may use estimated load values if actual load data is not available. WAPA will review and adjust, where necessary, inaccurate estimates received during the allocation process.
4. WAPA will consider allocations below 1,000 kW.
5. Qualified applicants seeking an allocation as an aggregated group must demonstrate to WAPA's satisfaction the existence of a contractual aggregation arrangement prior to WAPA's notice of final allocations. Members of an aggregated group must individually and collectively meet preference status and all other eligibility requirements. Qualified applicants aggregating their loads will be required to enter into a single firm power contract with WAPA, with the aggregated group entity as the contracting party.
6. An allottee will have the right to purchase power from WAPA only upon execution of an electric service contract between WAPA and the allottee, and satisfaction of all conditions in that contract.
IV. General Criteria and Contract Principles
WAPA will apply the following criteria and contract principles to all contracts executed under the new marketing plan:
A. Electric service contracts shall be executed no later than May 31, 2028, unless otherwise agreed to in writing by WAPA.
B. Contracts will include clauses specifying criteria that contractors must meet on a continuous basis to be eligible to receive electric service from WAPA.
C. All power supplied by WAPA will be delivered pursuant to MSI, which will be part of contractors' electric service contracts.
D. Contracts shall provide for WAPA to furnish electric service effective October 1, 2028, through September 30, 2048.
E. Contracts shall incorporate WAPA's standard provisions for electric service contracts, integrated resource plans, and General Power Contract Provisions, as determined by WAPA.
F. WAPA will adopt a new minimum scheduling requirement that aligns with Reclamation's generation schedule and how energy is scheduled within the Western Interconnection. WAPA intends for contractors to receive the maximum benefit of their resource allocations while accommodating the following goals: meeting Reclamation's water requirements; reducing purchase power and wheeling costs; and minimizing sales of energy in low load hours. WAPA will develop a tool that uses Reclamation's 24-Month Study data, the status of generators, water volumes and elevation, reduced water releases, hourly pricing and projected hourly load, and other relevant information to model and produce an optimized monthly capacity and monthly minimum energy requirement for each contractor. Prior to the execution of contracts for the 2028-2048 marketing period, WAPA will provide examples of methods being considered, seek feedback from existing contractors and potential new allottees, and select which option provides the greatest flexibility and achieves the goals identified herein. Minimum scheduling requirements will be included in the MSI.
G. WAPA may, as it deems reasonable and necessary, enter into other agreements such as: transmission service agreements, interchange agreements, reserve agreements, load regulation agreements, exchange agreements, maintenance and emergency service agreements, power pooling agreements, or other transactions.
H. P-DP will remain operationally integrated with the Boulder Canyon Project, subject to applicable operational restraints of the Bureau of Reclamation, applicable laws, and the other requirements of the marketing plan.
I. WAPA, at its discretion and sole determination, reserves the right to adjust the CROD on five years' written notice in response to changes in hydrology and river operations. Such adjustments will take place only after WAPA conducts a public process.
J. Renewable energy certificates associated with P-DP power will be made available to contractors and may be sold or transferred to third parties, provided such sale or transfer is consistent with WAPA policy and documented in electric service contracts.
K. Each entity is ultimately responsible for obtaining its own delivery or other arrangements to its load. Transmission service over the P-DP system will be provided in accordance with Part V of this Final 2028 Plan.
L. WAPA may develop rate schedules for services provided under the Final 2028 Plan. Such rates will be developed through a separate public process.
M. Contractors must pay all applicable rates and charges in the manner and within the time prescribed in the contract.
N. P-DP will remain financially segregated for the purposes of accounting and project repayment. Beginning June 1, 2005, and until the end of the repayment period for the Central Arizona Project, P-DP provides for surplus revenues by including the equivalent of 4 1/2 mills per kWh in the rates charged to contractors in Arizona and by including the equivalent of 2 1/2 mills per kWh in the rates charged to contractors in California and Nevada. After the repayment period for the Central Arizona Project, the equivalent of 2 1/2 mills per kWh shall be included in the rate charged to all contractors in Arizona, Nevada, and California.
O. Consistent with the current P-DP Advancement of Funds contract, new allottees will be required to reimburse existing contractors for undepreciated replacement advances, to the extent existing contractors' allocations are reduced as a result of creating the resource pool. New allottees who receive an allocation will be required to prepay for service according to the applicable rate schedule and may participate in advance funding of WAPA's and Reclamation's operation and maintenance expenses, consistent with the existing Advancement of Funds contract, or an updated version of the contract that addresses the status of P-DP, as appropriate.
P. Deficits for costs incurred during a previous marketing period will not be passed through to new allottees.
V. Transmission Service
P-DP power will be delivered to designated points of delivery on WAPA's P-DP transmission system. Contractors must secure all necessary transmission service to deliver Federal power beyond WAPA's P-DP transmission system. WAPA may assist new contractors in obtaining third-party transmission arrangements for delivery of firm power allocated during the forthcoming marketing period. WAPA will determine the use of its transmission resources concurrently with further development of the products and services under this Final 2028 Plan. A list of designated delivery points will be provided on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/. WAPA will market surplus transmission capacity on P-DP under WAPA's Open Access Transmission Tariff and other applicable arrangements.
Call for Resource Pool Applications
The Final 2028 Plan describes how WAPA will market its P-DP power resources beginning October 1, 2028, through September 30, 2048. As part of ( print page 89010) the Final 2028 Plan, WAPA is creating a resource pool to offer two percent of P-DP's marketable power resource to qualified applicants. WAPA, at its discretion, will allocate the resource pool to selected applicants that meet the Eligibility Criteria and Allocation Criteria defined in the Final 2028 Plan. The process by which WAPA will make final allocation decisions and implement such allocations is outlined below.
I. Applications for Power
Through this Federal Register notice, WAPA formally requests applications from qualified preference entities seeking to purchase power from P-DP from October 1, 2028, through September 30, 2048. Existing contractors do not need to submit an application. All applicants must submit applications using the APD form so that WAPA has a uniform basis upon which to evaluate the applications. To be considered, applicants must meet the Eligibility Criteria and Allocation Criteria contained in the Final 2028 Plan and must submit a completed APD application form by the deadline specified in the DATES section. To ensure full consideration is given to all applicants, WAPA will not consider requests for power or applications submitted before publication of this Federal Register notice or after the deadlines specified in the DATES section.
A list of designated delivery points will be provided on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/.
II. Applicant Profile Data
The APD form has been approved by the Office of Management and Budget under Control No. 1910-5136. Applications may be submitted by mail or email, as described in the ADDRESSES section. APD forms are available on WAPA's website at https://www.wapa.gov/about-wapa/regions/dsw/pdpremarketing/ or by request to Jennifer Henn, Power Marketing Advisor, Desert Southwest Region, Western Area Power Administration, (602) 605-2572 or email: pdp-remarketing@wapa.gov. It is the applicant's responsibility to ensure it submits its application in a timely manner, so WAPA receives the applications before the date and time stated in the DATES section.
Applicants must provide all information requested on the APD form, if available and applicable. Please indicate if the requested information is not applicable or not available. WAPA may request, in writing, additional information from any applicant whose application is deficient. The applicant will have 10 business days from the date on WAPA's request to provide the information. In the event an applicant fails to provide all information to WAPA, the application will not be considered.
The information in the APD form should be answered as if prepared by the entity/organization seeking the allocation of Federal power.
The information collected under this process will not be part of a system of records covered by the Privacy Act and may be available under the Freedom of Information Act. If you are submitting any confidential or business sensitive information, please mark such information before submitting your application.
III. Recordkeeping Requirement
If WAPA accepts an application and the applicant receives an allocation of Federal power, the applicant must keep all information related to the APD for a period of 3 years after signing a contract for Federal power. There is no recordkeeping requirement for unsuccessful applicants who do not receive an allocation of Federal power.
WAPA has obtained Office of Management and Budget Clearance Number 1910-5136 for collection of the above information. The APD form is collected to enable WAPA to properly perform its function of marketing limited amounts of Federal hydropower. The data supplied will be used by WAPA to evaluate who will receive an allocation of Federal power.
IV. Contracting Process
After WAPA has evaluated the applications, WAPA will publish a notice of Proposed 2028 Allocations in the Federal Register . The public will have an opportunity to comment on the Proposed 2028 Allocations. After reviewing the comments, WAPA will publish a notice of Final 2028 Allocations in the Federal Register . WAPA will begin the contracting process with the new allottees after publishing final allocations in the Federal Register , tentatively scheduled for summer 2026. WAPA will offer a pro forma contract for power allocated under the Final 2028 Allocations. Allottees will be required to sign their electric service contract for WAPA to execute no later than May 31, 2028. Electric service contracts will be effective upon WAPA's signature, and service will begin on October 1, 2028, and continue through September 30, 2048.
Legal Authorities
WAPA developed the Final 2028 Plan and Call for Resource Pool Applications in accordance with its power marketing authorities pursuant to the Department of Energy Organization Act (42 U.S.C. 7101, et seq.); the Reclamation Act of June 17, 1902 (32 Stat. 388), as amended and supplemented by subsequent enactments, particularly section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)); and other acts specifically applicable to P-DP.
Procedural Requirements
Review Under the Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 3501, et seq.), WAPA has received approval from the Office of Management and Budget for the collection of customer information under control number 1910-5136.
Environmental Compliance
WAPA has determined this action fits within the following categorical exclusions listed in appendix B to subpart D of 10 CFR part 1021: B4.1 (Contracts, policies, and marketing and allocation plans for electric power) and B4.4 (Power marketing services and activities). Categorically excluded projects and activities do not require preparation of either an environmental impact statement or an environmental assessment.[2] A copy of the categorical exclusion determination is available on WAPA's website under the 2024 accordion menu at www.wapa.gov/about-wapa/regions/dsw/environment.
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 October 30, 2024, by Tracey A. LeBeau, Administrator, Western Area Power Administration. 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 ( print page 89011) 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 6, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
Footnotes
1. See Act of March 7, 1928, 45 Stat. 200, 210-212.
Back to Citation2. The determination was done in compliance with NEPA (42 U.S.C. 4321 through 4347); the Council on Environmental Quality Regulations for implementing NEPA (40 CFR parts 1500 through 1508); and DOE NEPA Implementing Procedures and Guidelines (10 CFR part 1021).
Back to Citation[FR Doc. 2024-26162 Filed 11-8-24; 8:45 am]
BILLING CODE 6450-01-P
Document Information
- Effective Date:
- 12/12/2024
- Published:
- 11/12/2024
- Department:
- Western Area Power Administration
- Entry Type:
- Notice
- Action:
- Notice of final plan and call for resource pool applications.
- Document Number:
- 2024-26162
- Dates:
- The Final 2028 Plan will become effective December 12, 2024 to make power allocations and complete the other processes necessary to begin providing service on October 1, 2028. Resource pool applications must be received on or before 5:00 p.m., Mountain Standard Time (MST), on January 31, 2025. WAPA will accept applications using the APD form by email or by certified mail (or its equivalent). Applications sent by regular mail will be accepted if postmarked before January 31, 2025, and received ...
- Pages:
- 88999-89011 (13 pages)
- PDF File:
- 2024-26162.pdf