[Federal Register Volume 60, Number 225 (Wednesday, November 22, 1995)]
[Notices]
[Pages 57859-57867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28534]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Boulder Canyon Project--Notice of Rate Order
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of rate order.
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SUMMARY: This notice announces the confirmation and approval by the
Deputy Secretary of the Department of Energy (DOE) of Rate Order No.
WAPA-70 and Rate Schedule BCP-F5 placing into effect the rate
methodology for determining the Annual Revenue Requirement, Base
Charge, Forecast Capacity Rate and Forecast Energy Rate, and Calculated
Energy Rate for the Boulder Canyon Project (BCP) of the Western Area
Power Administration (Western) on an interim basis. The rate
methodology and the charges/rates will remain in effect on an interim
basis until the Federal Energy Regulatory Commission (FERC) confirms,
approves, and places them into effect on a final basis or until
superseded.
DATES: Rate Schedule BCP-F5 will be placed into effect on an interim
basis on the first day of the first full billing period beginning on or
after November 1, 1995, and will be in effect until FERC confirms,
approves, and places the rate schedule in effect on a final basis for a
5-year period, or until superseded.
FOR FURTHER INFORMATION CONTACT:
Mr. J. Tyler Carlson, Area Manager, Phoenix Area Office, Western Area
Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457 and (602)
352-2453 and
Mr. Joel K. Bladow, Assistant Administrator for Washington Liaison,
Western Area Power Administration, Room 8G-027, Forrestal Building,
1000 Independence Avenue, SW., Washington, DC 20585-0001, (202) 586-
5581.
SUPPLEMENTARY INFORMATION: The proposed rate methodology is the result
of Western, the Bureau of Reclamation (Reclamation), and the BCP
Contractors\1\ successfully concluding negotiations on the BCP
Implementation Agreement which became effective February 17, 1995. The
BCP Implementation Agreement resolved eleven issues (1) Replacements;
(2) Visitor Facilities; (3) Amendment to Regulations; (4) Multi-Project
Benefits and Costs; (5) Engineering & Operation Committee (E&OC) and
Coordinating Committee; (6) Billing and Payment; (7) Operation Amount
and Working Capital; (8) Audits; (9) Principal Payments; (10) Annual
Rate Adjustments; and (11) Uprating Credits.
\1\The BCP Contractors include the Arizona Power Authority;
Colorado River Commission of Nevada; City of Boulder City, Nevada;
Department of Water and Power of the City of Los Angeles; The
Metropolitan Water District of Southern California; Southern
California Edison Company; and the Cities of Anaheim, Azusa,
Banning, Burbank, Colton, Glendale, Pasadena, Riverside, and Vernon,
California.
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Four major changes are affecting the power rates for the BCP. The
first change concerns the ratesetting methodology. Under the
Implementation Agreement of February 17, 1995, the new rate methodology
provides that the BCP Contractors will pay each year for the Annual
Revenue Requirement. From the Annual Revenue Requirement, a Base Charge
for both capacity and energy is calculated. The Base Charge is
calculated by dividing the Annual Revenue Requirement equally between
energy (Energy Dollar) and capacity (Capacity Dollar), with an
adjustment (Capacity Credit) to resolve the historic revenue imbalance
between energy and capacity. The Contractor's energy Base Charge each
month will be the Rate Year's Energy Dollar multiplied by the
Contractor's Firm Energy percentage multiplied by the Contractor's
Monthly Energy Ratio. The Contractor's capacity Base Charge each month
will be the Rate Year's Capacity Dollar divided by 12 multiplied by the
Contractor's Contingent Capacity percentage.
For each Rate Year, Western will calculate a Forecast Capacity Rate
and a Forecast Energy Rate. These rates will be applied to services
such as: excess energy, unauthorized overruns, and water pump energy.
Within 90 days after, the end of the Rate Year, a Calculated Energy
Rate shall be calculated.
The second change concerns reducing the Annual Uprating Payments.
The Uprating payments are payments due the BCP Schedule B Contractors
for advancing funds to upgrade the BCP system. The Colorado River
Commission
[[Page 57860]]
of Nevada requested and obtained approval from the BCP Engineering &
Maintenance Committee to reduce their Uprating Credit Carryforward
balance.
The third change concerns the projection of a large carryover
balance in the Colorado River Dam Fund, which is proposed to be applied
against FY 1996 expenses, reducing the need for FY 1996 revenue. In
previous rate studies, no carryover balance was assumed available in
the ratesetting year. However, implementing a provision of the BCP
Implementation Agreement requires projecting actual FY 1996. This rate
order assumes the full amount of the carryover is applied against FY
1996 expenses, offsetting the need for an equal amount of power revenue
in FY 1996.
The fourth change affecting the BCP power rate is the assumed
completion of the Hoover Dam Visitor Facilities in FY 1996. This
increases the annual interest payment due in FY 1996 and subsequent
years by nearly $10 million annually. Partially offsetting this
increased expenses is an increase in revenue from visitors' fees
assumed to begin in FY 1996. The ``Other revenue'' category is assumed
to increase from $2.4 million in FY 1995 to $6.0 million in FY 1996.
The net effect of all these changes is to decrease the revenues
that need to be collected through power bills in FY 1996 from $49.3
million to $45.2 million on an 8.4 percent decrease.
The existing rate, proposed Base Charge, Forecast Energy Rate, and
Forecast Capacity Rate for the 5-year period are as follows:
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Proposed\2\
Existing rates charges/rates
(FY 1995) (FY 1996)
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Rate Schedule.............................. BCP-F4/2 ................................... BCP-F5
Base Charge\3\ ($1,000):
Energy Dollar................... $23,460
Capacity Dollar................. $21,737
Firm Energy Rate (mills per kilowatthour). 6.31 Forecast Energy Rate (mills per 6.12
kilowatthour).
Firm Capacity Rate ($ per kilowatt-month).. 1.07 Forecast Capacity Rate ($ per $0.93
kilowatt-month).
Composite Rate (mills per kilowatthour).... 12.62 Composite Rate (mills per 11.79
kilowatthour).
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2New rates will be determined each year, based upon the proposed new rate setting methodology. These charges and
rates represent FY 1996 only.
3The monthly charge for each Contractor is calculated as follows: (1) Energy Base Charge=Rate Year Energy Dollar
multiplied by the Contractor's Firm Energy percentage multiplied by its Monthly Energy Ratio and (2) Capacity
Base Charge=Rate Year Capacity Dollar divided by 12 multiplied by the Contractor's contingent Capacity
percentage. For FY 1996, upon the determination of the actual October 1995 energy and capacity charges, the
monthly Energy Charge and Capacity Charge for the remaining months will be adjusted so the BCP Contractors
will not pay more than the FY 1996 Annual Revenue Requirement.
Upon completion of the written procedures for the Uprating Credit
Program and receipt of revised Uprating Credit Schedules, the FY 1996
Energy Dollar and Capacity Dollar will be adjusted by the difference
over the remaining months of FY 1996 so the BCP Contractors will not
pay more than the FY 1996 Annual Revenue Requirement.
Statement of Annual Base Charge
The annual Base Charge for both capacity and energy for the BCP
will be based upon the estimated Annual Revenue Requirement contained
in the annual power repayment spreadsheet study (PRSS). The Base Charge
is comprised of the Energy Dollar (50-percent of the Annual Revenue
Requirement plus the Capacity Credit) and Capacity Dollar (50-percent
of the Annual Revenue Requirement minus the Capacity Credit).
Differences between the estimated and the actual Annual Revenue
Requirement for the Rate Year will be calculated at the end of each FY
when final financial data becomes available and will be used in
adjusting the next years' Annual Revenue Requirement.
By Amendment No. 3 to Delegation Order No. 0204-108, published
November 10, 1993 (58 FR 59716), the Secretary of Energy (Secretary)
delegated (1) the authority to develop long-term power and transmission
rates on a nonexclusive basis to the Administrator of Western; (2) the
authority to confirm, approve, and place such rates into effect on an
interim basis to the Deputy Secretary; and (3) the authority to
confirm, approve, and place into effect on a final basis, to remand, or
to disapprove such rates to FERC. Existing DOE procedures for public
participation in power rate adjustments (10 CFR Part 903) became
effective on September 18, 1985 (50 FR 37835).
These power rates are established pursuant to section 302(a) of the
DOE Organization Act, 42 U.S.C. Sec. 7152(a), through which the power
marketing functions of the Secretary of the Interior and Reclamation
under the Reclamation Act of 1902, 43 U.S.C. Sec. 371 et seq., as
amended and supplemented by subsequent enactments, particularly section
9(c) of the Reclamation Project Act of 1939, 43 U.S.C. Sec. 485h(c),
and other acts specifically applicable to the project system involved,
were transferred to and vested in the Secretary.
During the 109-day comment period, Western received eight written
comments. In addition, five speakers commented during the July 13,
1995, public comment forum. All comments and responses are addressed in
the rate order.
Rate Order No. WAPA-70, confirming, approving, and placing the
proposed rate methodology for determining the Annual Revenue
Requirement, Base Charge, Forecast Capacity Rate, Forecast Energy Rate,
and Calculated Energy Rate for the BCP into effect on an interim basis,
is issued, and the Rate Schedule BCP-F5 will be submitted promptly to
FERC for confirmation and approval on a final basis.
Issued in Washington, DC, October 31, 1995.
Charles B. Curtis,
Deputy Secretary.
Department of Energy, Deputy Secretary
Order Confirming, Approving, and Placing the Boulder Canyon Project
Firm Power Service Rate Into Effect on an Interim Basis
In the matter of: Western Area Power Administration Rate
Adjustment for Boulder Canyon Project
[Rate Order No. WAPA-70]
November 1, 1995.
The rate methodology is established pursuant to section 302(a) of
the Department of Energy (DOE) Organization Act, 42 U.S.C.
Sec. 7152(a), through which the power marketing functions of the
Secretary of the Interior and the Bureau of Reclamation (Reclamation)
under the Reclamation
[[Page 57861]]
Act of 1902, 43 U.S.C. Sec. 371 et seq., as amended and supplemented by
subsequent enactments, particularly section 9(c) of the Reclamation
Project Act of 1939, 43 U.S.C. Sec. 485h(c), and other acts
specifically applicable to the project system involved were transferred
to and vested in the Secretary of Energy (Secretary).
By Amendment No. 3 to Delegation Order No. 0204-108, published
November 10, 1993 (58 FR 59716), the Secretary delegated (1) the
authority to develop long-term power and transmission rates on a
nonexclusive basis to the Administrator of the Western Area Power
Administration (Western); (2) the authority to confirm, approve, and
place such rates into effect on an interim basis to the Deputy
Secretary; 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. Existing DOE procedures for
public participation in power rate adjustments (10 CFR Part 903) became
effective on September 18, 1985 (50 FR 37835).
Acronyms and Definitions
As used in this rate order, the following acronyms and definitions
apply:
1941 General Regulations: General regulations for generation and
sale of power in accordance with the Boulder Canyon Project Adjustment
Act.
1984 Act: Hoover Power Plant Act of 1984, August 17, 1984 (43
U.S.C. 619 et seq.).
Adjustment Act: Boulder Canyon Project Adjustment Act, July 19,
1940 (43 U.S.C. 618 et seq.).
Annual Capacity Credit: The dollar amount used to adjust the Energy
Dollar and Capacity Dollar in order to resolve the historic revenue
imbalance between energy and capacity.
Annual Rate: A rate revision recommended to and approved by the
Deputy Secretary of Energy for approval on an annual basis for the
interim years of the 5-year period.
Annual Revenue Requirement: An amount used to calculate the
Capacity Dollar and Energy Dollar equal to the estimated actual
expenses for the Rate Year less the sum of (1) multi-project benefits;
(2) carryover of funds from the prior FY; (3) estimated BCP water
revenue; (4) estimated User Fees; and (5) funds from other sources,
except revenue from the sale of capacity and energy.
Base Charge: The total charge paid by a Contractor for capacity and
energy based on the Annual Revenue Requirement, pursuant to Section 13
of the BCP Implementation Agreement effective February 17, 1995. The
Base Charge shall be composed of a capacity component and an energy
component.
BCP: Boulder Canyon Project.
BCP Contractors: The BCP Contractors include the Arizona Power
Authority; Colorado River Commission of Nevada; City of Boulder City,
Nevada; Department of Water and Power of the City of Los Angeles,
California; the Metropolitan Water District of Southern California;
Southern California Edison Company; and the Cities of Anaheim, Azusa,
Banning, Burbank, Colton, Glendale, Pasadena, Riverside, and Vernon,
California.
BCP Implementation Agreement: An agreement which became effective
February 17, 1995. The agreement resolved eleven issues (1)
Replacements; (2) Visitor Facilities; (3) Amendment to Regulations; (4)
Multi-Project Benefits and Costs; (5) Engineering & Operating Committee
(E&OC) and Coordinating Committee; (6) Billing and Payment; (7)
Operating Amount and Working Capital; (8) Audits; (9) Principal
Payments; (10) Annual Rate Adjustments; and (11) Uprating Credits.
Calculated Energy Rate: This rate equals fifty percent (50%) of the
Annual Revenue Requirement for each FY divided by the Energy Deemed
Delivered in such FY.
Capacity Dollar: The amount of revenue to be billed for Project
capacity sales for each Fiscal Year. Such amount shall be fifty percent
(50%) of the Annual Revenue Requirement, adjusted for the Annual
Capacity Credit in accordance with Section 13.9 of the BCP
Implementation Agreement.
Colorado River Basin Project Act: The Colorado River Basin Project
Act, September 30, 1968 (43 U.S.C. 1501 et seq.).
Contribution Charge: LCRBDF surcharge is part of the rate schedule
and is expressed in mills per kWh; required by law to be included in
the BCP rates.
Conformed Criteria: Conformed general consolidated power marketing
criteria or regulations for Boulder City Area Projects (49 FR 50582,
December 28, 1984) beginning on June 1, 1987.
CRDF: Colorado River Dam Fund. A fund established by Section 2 of
the Project Act which is to be used only for the purposes specified in
the Adjustment Act, Colorado River Basin Project Act of 1968, and the
1984 Act.
DOE: Department of Energy.
DOE Order RA 6120.2: An order related to power marketing
administration financial reporting.
$/kW-month: Dollars per kilowatt-month.
E&OC: Engineering and Operating Committee, consisting of members
from BCP Contractors, Western, and Reclamation. Its function is to
establish a regular review process of Western's and Reclamation's
planned O&M, additions, and replacements.
Energy Deemed Delivered: The amount of energy scheduled, delivered,
metered and calculated to be delivered to each Contractor, including
ML and SL.
Energy Dollar: The amount of revenue to be billed for BCP energy
sales for each FY. Such amount shall be fifty percent (50%) of the
Annual Revenue Requirement, adjusted for the Annual Capacity Credit in
accordance with Section 13.9 of the BCP Implementation Agreement.
FERC: Federal Energy Regulatory Commission.
Forecast Capacity Rate: This rate equals the Capacity Dollar
divided by 1,951,000 kW.
Forecast Energy Rate: This rate equals the Energy Dollar divided by
the lesser of the Total Master Schedule or 4,501.001 MWh.
FY: Fiscal Year.
Hoover Dam: The dam on the Colorado River which forms Lake Mead.
kW: Kilowatt.
kWh: Kilowatthour.
LCRBDF: Lower Colorado River Basin Development Fund--a fund
established by the Colorado River Basin Project Act of 1968.
Ml and Sl: Motoring losses and system losses.
Master Schedule: This is an 18-month schedule of projected BCP
hydrology.
mills/kWh: Mills per kWh.
Monthly Energy Ratio: The estimated amount of energy each
Contractor is to receive each month in accordance with the final Master
Schedule divided by the total energy that Contractor is to receive in
that FY under the final Master Schedule.
NEPA: National Environmental Policy Act of 1969.
OMB: Office of Management and Budget.
O&M: Operation and maintenance.
Project Act: The Boulder Canyon Project Act authorizing the
construction of Boulder Canyon Project dated December 21, 1928 (43
U.S.C. 617 et seq.).
PRSS: Power Repayment Spreadsheet Study.
Rate Year: The FY in which the Base Charge, Forecast Capacity Rate,
and Forecast Energy Rate are determined and effective.
Reclamation: Bureau of Reclamation, U.S. Department of the
Interior.
Replacements: A unit of property constructed or acquired as a
substitute
[[Page 57862]]
for a existing unit of property for the purpose of maintaining the
power features of a project or the joint features properly allocated to
power.
Schedule B Contractors: The BCP Contractors that advanced funds to
upgrade the BCP System.
Secretary: Secretary of Energy.
Treasury: Secretary of the Department of the Treasury.
Uprating Program: A program nonfederally financed by eleven (11) of
the BCP Contractors. The purpose was to increase the capacity of the
existing generating and associated electrical equipment at the BCP.
Western: Western Area Power Administration, U.S. Department of
Energy.
Western's 1986 General Regulations: General Regulations for the
Regulations: Charges for the Sale of Power from the Boulder Canyon
Project, 10 CFR Part 904.
Working Capital Fund: Reserve of funds contributed by the
Contractors to be used when the Colorado River Dam Fund has no money
available.
Effective Date
The proposed rate methodology for determining the Annual Revenue
Requirement, Base Charge, Forecast Capacity Rate, Forecast Energy Rate,
and Calculated Energy Rate, will become effective on an interim basis
beginning November 1, 1995, and remain in effect pending FERC's
approval on a final basis for a 5-year period, or until superseded.
Public Notice and Comment
The Procedures for Public Participation in Power and Transmission
Rate Adjustments and Extensions, 10 CFR Part 903, have been followed by
Western in developing the method of determining the Annual Revenue
Requirement, Base Charge, Forecast Capacity Rate, Forecast Energy Rate,
and the Calculated Energy Rate.
The following summarizes the steps Western took to ensure
involvement of interested parties in the rate process:
1. Discussion of the proposed rate methodology was initiated at an
informal BCP Contractor meeting held on April 13, 1995, in Phoenix,
Arizona. At this informal meeting, Western and Reclamation
representatives explained the need for a change in the Annual Revenue
Requirements, Forecast Capacity Rate, Forecast Energy Rate, and
answered questions from those persons attending.
2. A Federal Register notice was published on May 8, 1995 (60 FR
22575), officially announcing the proposed firm power rate adjustment
process, initiating the public consultation and comment period,
announcing the public information and public comment forums, and
presenting procedures for public participation.
3. On May 18, 1995 a letter was mailed from Western's Phoenix Area
Office to all Boulder Canyon Project customers and other interested
parties providing a copy of the Boulder Canyon Project Rate Brochure,
dated May 1995, which included a copy of the Federal Register notice of
May 8, 1995.
4. At the public information forum held on June 15, 1995, Western
and Reclamation representatives explained the proposed rate
methodology, a change in the proposed billing procedure, and outlined
the reasoning for the overall decrease in the Annual Revenue
Requirement for Rate Year 1996 in greater detail and answered
questions.
5. On August 4, 1995, a letter was mailed from Western's Phoenix
Area Office to all Boulder Canyon Project customers and other
interested parties announcing the extension of the consultation and
comment period through August 25, 1995.
6. A public comment forum was held on July 13, 1995, to give the
public an opportunity to comment for the record. Five persons
representing customers and customer groups made oral comments.
7. A Federal Register notice was published on August 21, 1995,
announcing the extension of the consultation and comment period through
August 25, 1995.
8. Eight comment letters were received during the 109-day
consultation and comment period. The consultation and comment period
ended August 25, 1995. All formally submitted comments have been
considered in the preparation of this rate order.
Project History
The BCP was authorized for construction by the Project Act. The
Project Act provided for a dam to be built in the Black Canyon located
on the Colorado River adjacent to the Arizona- Nevada border. The dam
was built for the expressed purposes of (1) controlling the flooding in
the lower regions of the Colorado River drainage system; (2) improving
navigation of the Colorado River and its tributaries; (3) regulating
the Colorado River, while providing storage and delivery of the stored
water for the reclamation of public lands; and (4) generating
electrical energy as a means of making the BCP a self-supporting and
financially solvent undertaking. Congress authorized the Treasury to
advance up to $165 million to the Secretary of the Interior to provide
for the construction of the dam, powerplant, and related features; $25
million of the $165 million was allocated to flood control.
Construction of the Hoover Dam, formerly known as Boulder Dam,
began in 1930, and the first generating unit of the powerplant went
into service in 1937. Upon completion of the project facilities, power
sales commenced, in accordance with the provisions of the Project Act,
to contractors in the states of Arizona, California, and Nevada.
The Project Act was modified in 1940 by the Adjustment Act. The
Adjustment Act, among other things, authorized the Secretary of the
Interior to promulgate and to put into effect power rates based upon a
repayment period from June 1, 1937, to May 31, 1987; to reduce the
interest rate from 4 percent to 3 percent per annum on unpaid Treasury
advances; to require annual payments to the states of Arizona and
Nevada in lieu of taxes levied; and to defer without interest until
June 1, 1987, the repayment of the $25 million allocated to flood
control.
Subsequent and pursuant to the Adjustment Act, the Secretary of the
Interior published and implemented the 1941 General Regulations for the
period ending May 31, 1987.
As the end of the 50-year term of the original contracts
approached, controversy developed among the BCP contractors over
renewal rights to the BCP power, and litigation resulted. Compromises
were reached and embodied in the 1984 Act.
The 1984 Act authorized an increase in the capacity of the existing
generating and associated electrical equipment at the BCP. The work to
accomplish this increase, referred to as the Uprating Program, was
funded initially by advances from certain BCP Contractors to
Reclamation. Funds advanced would be returned to these contractors
through credits on their monthly power bills. The 1984 Act provided for
advances from the Treasury for the improvement of visitor facilities at
the BCP. The 1984 Act also required that an additional charge of 4.5
mills/kWh be assessed on energy sales to Arizona and an additional
charge of 2.5 mills/kWh be assessed on energy sales to California and
Nevada; all revenue resulting from the Contribution Charge is to be
transferred to the LCRBDF.
Under the 1984 Act, the BCP's power was sold to 15 contractors
located in the states of Arizona, California, and
[[Page 57863]]
Nevada, in accordance with the Conformed Criteria.
Due to the numerous requirements set out in the 1984 Act and the
earlier separation of the Federal responsibilities relating to Hoover
Dam between Reclamation and Western, both agencies published new
regulations governing their respective responsibilities at the BCP
after June 1, 1987. These regulations are cited herein as Reclamation's
1986 General Regulations and Western's 1986 General Regulations, and
they supersede the 1941 General Regulations, which terminated on May
31, 1987.
Power Repayment Spreadsheet Studies
A PRSS is prepared each FY to determine the power revenues required
to pay, within the prescribed time periods, all costs assigned to the
power function. Repayment criteria are based on law, policies, and
authorizing legislation. DOE Order RA 6120.2, section 12b, requires
that:
In addition to the recovery of the above costs (operation and
maintenance and interest expenses) on a year-by-year basis, the
expected revenues are at least sufficient to recover (1) each dollar
of power investment at Federal hydroelectric generating plants
within 50 years after they become revenue producing, except as
otherwise provided by law; plus, (2) each annual increment of
Federal transmission investment within the average service life of
such transmission facilities or within a maximum of 50 years,
whichever is less; plus, (3) the cost of each replacement of a unit
of property of a Federal power system within its expected service
life up to a maximum of 50 years; plus, (4) each dollar of assisted
irrigation investment within the period established for the
irrigation water users to repay their share of construction costs;
plus, (5) other costs such as payments to basin funds, participating
projects, or States.
The BCP PRSS has been used to determine the Annual Revenue
Requirement, which includes the net of expenses (OM&R, payment to
states, uprating credit payments, interest and principal payments,
working capital) minus other revenue (prior year carryover balance,
water revenue, and other revenue).
Existing and Provisional Rates
A comparison of the existing and provisional charges and rates
follows:
----------------------------------------------------------------------------------------------------------------
Existing Proposed\5\
charges/rates charges/rates
(FY 1995) (FY 1996)
----------------------------------------------------------------------------------------------------------------
Rate Schedule.............................. BCP-F4/2 BCP-F5
Base Charge\6\ ($1,000):...........
Energy Dollar................... $23,460
Capacity Dollar................. $21,737
Firm Energy Rate (mills per kilowatthour).. 6.31 Forecast Energy Rate (mills per 6.12
kilowatthour).
Firm Capacity Rate ($ per kilowatt-month).. 1.07 Forecast Capacity Rate ($ per $0.93
kilowatt-month).
Composite Rate (mills per kilowatthour).... 12.62 Composite Rate (mills per 11.79
kilowatthour).
----------------------------------------------------------------------------------------------------------------
\5\New rates will be determined each year, based upon the proposed new rate setting methodology. These charges
and rates represent FY 1996 only.
\6\The monthly charge for each Contractor is calculated as follows: (1) Energy Base Charge = Rate Year Energy
Dollar multiplied by the Contractor's Firm Energy percentage multiplied by its Monthly Energy Ratio and (2)
Capacity Base Charge = Rate Year Capacity Dollar divided by 12 multiplied by the Contractor's contingent
Capacity percentage. For FY 1996, upon the determination of the actual October 1996 energy and capacity
charges, the monthly Energy Charge and Capacity Charge for the remaining months will be adjusted so the BCP
Contractors will not pay more than the FY 1996 Annual Revenue Requirement.
Certification of Rate
Western's Administrator has certified that the rate methodology for
determining the BCP Annual Revenue Requirement, Base Charge, Forecast
Energy Rate, Forecast Capacity Rate, and Calculated Energy Rate placed
into effect on an interim basis herein are the lowest possible,
consistent with sound business principles. The rate methodology has
been developed in accordance with administrative policies and
applicable laws.
Discussion
Western is requesting approval to place into effect a new rate
methodology. Each year the contractors will pay the BCP the total
estimated Annual Revenue Requirement in return for up to 1,951,000 kW
of capacity and 4,501.001 MWh of energy at the BCP. The capacity and
energy, produced up to the above limits at the BCP, have been allocated
to the contractors on a percentage basis. Western will prepare an
annual PRSS which will identify the estimated annual revenue
requirements for the next FY. The annual operation, maintenance, and
replacement budgets will be presented to and approved by the BCP E&OC.
Upon completion of the Uprating Credit Procedures and receipt of
revised Uprating Credit Schedules, the FY 1996 Energy Dollar and
Capacity Dollar will be adjusted by the difference between the
originally projected Annual Uprating Credit Payments and the revised
Annual Uprating Credit Payments and spread over the remaining months of
FY 1996 so the BCP Contractors will not pay more than the revised FY
1996 Annual Revenue Requirement.
Revenue Requirements
The existing and proposed Annual Revenue Requirements for the BCP
are as follows:
------------------------------------------------------------------------
Estimated FY 1996
existing proposed
------------------------------------------------------------------------
Annual Revenue Requirements (rounded to nearest
$1,000)......................................... $57,720 $45,197
------------------------------------------------------------------------
The methodology for determining the Annual Revenue Requirement will
satisfy the cost-recovery criteria set forth in DOE Order RA 6120.2.
Statement of Revenue and Related Expenses
The Annual Revenue Requirement for the BCP is based upon Ratebase
PRSS estimates of the Rate Year's annual costs less other revenues.
Each FY's estimated Annual Revenue Requirement will be adjusted when
actual financial data becomes available. The following table provides a
summary of the revenue and related expenses through the 5-year
provisional rate approval period.
[[Page 57864]]
Boulder Canyon Project Projections of 5-Year Period Revenues and Expenses
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Provisional Existing annual
annual revenue revenue
requirement PRSS requirement PRSS Difference
1996-2000 1996-2000
----------------------------------------------------------------------------------------------------------------
Total Revenues............................................ $276,261 $269,702 $6,559
-----------------------------------------------------
Revenue Distribution:
O&M................................................... 131,051 110,664 20,387
Payment to States..................................... 3,000 3,000 0
Other Expenses........................................ 23,201 18,950 4,251
Annual Uprating Payments.............................. 74,699 76,888 -2,189
Annual Replacements................................... 20,402 10,577 9,825
Working Capital Fund.................................. 653 0 653
Interest.............................................. 62,577 53,996 8,581
Principal Payments.................................... 13,255 12,887 368
CRDF Carry-Over Balance............................... (13,317) 0 -13,317
Water Sales........................................... (2,650) (2,250) -400
Other Revenue......................................... (36,610) (15,010) -21,600
-----------------------------------------------------
Annual Revenue Requirement (rounded to the nearest
$1,000)............................................ 276,261 269,702 6,559
----------------------------------------------------------------------------------------------------------------
Note: The difference between the Annual Revenue Requirements for the existing rates and the provisional rates is
because the existing rates are based upon the FY 1993 budget and the provisional rates are based upon the FY
1996 budget.
Basis for Rate Methodology--Boulder Canyon Project
The proposed rate methodology is the result of Western,
Reclamation, and the BCP Contractors successfully concluding
negotiations on the BCP Implementation Agreement which became effective
February 17, 1995.
The FY 1996 Energy Dollar and Capacity Dollar are designed to
maintain a 50/50 split between revenue earned from energy and revenue
earned from capacity. The Capacity Credit revenue adjustment resolves
the historic imbalance between revenues collected from capacity and
energy. The cost to individual BCP Contractor will vary because of the
differences in each BCP Contractor's entitlement.
Each Contractor shall be billed monthly a Base Charge comprised of
(1) an energy charge equal to the Rate Year Energy Dollar multiplied by
the Contractor's Firm Energy percentage multiplied by their Monthly
Energy Ratio and (2) a capacity charge equal to the Rate Year Capacity
Dollar divided by 12 multiplied by the Contractor's Contingent Capacity
percentage. The FY 1996 Rate Year's Energy Dollar and Capacity Dollar
will be adjusted over the remaining 11 months of FY 1996, so that the
BCP Contractors will not pay more than the estimated Annual Revenue
Requirement for FY 1996. The monthly energy and capacity charge will be
due and payable regardless of the amount of power and energy produced
by the BCP.
In addition to the Contractor's monthly base charge, a Forecast
Energy Rate and a Forecast Capacity Rate shall be calculated and will
be applied, for (1) excess energy, (2) unauthorized overruns, and (3)
water pump energy.
Within 90 days after the end of the FY and the Energy Deemed
Delivered has been determined, Western shall determine the Calculated
Energy Rate. If the Energy Deemed Delivered is greater than 4,501.001
MWh, Western shall then apply the Calculated Energy Rate to each
Contractor's Energy Deemed Delivered to determine the Contractor's
actual energy charge. Western shall then establish a credit or debit
for each Contractor based on the difference between the Contractor's
Energy Dollar and the Contractor actual energy charge. Such credit or
debit shall be issued by Western against the Contractor in the month
following the calculation or as soon as possible thereafter.
The preparation of each FY's PRSS shall include adjustments from
estimates to actuals in the previous year's PRSS. Any adjustments
required, whether resulting in an increase or decrease of the annual
revenue requirement, will be carried forward and included in the
estimated revenue requirement for the calculation of the next Rate
Year.
Comments
During the 109-day comment period, Western received eight written
comments either requesting information or commenting on the rate
adjustment. In addition, five persons commented during the July 13,
1995, public comment forum. All comments were reviewed and considered
in the preparation of this rate order.
Written comments were received from the following sources:
Colorado River Commission of Nevada (Nevada)
Irrigation & Electrical Districts Association of Arizona (Arizona)
Mr. Northcutt Ely for Los Angeles, City of, Department of Water and
Power and Southern California Edison Company (California) (2)
Metropolitan Water District of Southern California (California)
Overton Power District No. 5 and Valley Electric Association (Nevada)
R.W. Beck for the Arizona Power Authority (Arizona)
Vernon, City of (California)
Representatives of the following organizations made oral comments:
Arizona Power Authority (Arizona) (3 speakers)
Overton Power District No. 5 and Valley Electric Association (Nevada)
Los Angeles, City of, Department of Water and Power and Southern
California Edison Company (California)
Most of the comments received at the public meetings and in
correspondence dealt with the proposed rates, hydrology, cost
containment, and working capital fund. All comments were considered in
developing the proposed BCP rates.
The comments and responses, paraphrased for brevity, are discussed
below. Direct quotes from comment letters are used for clarification
where necessary.
[[Page 57865]]
Boulder Canyon Comments
Rates
Issue: Some customers are requesting a delay in the BCP rate
process in order to allow the customers, Western, and Reclamation
sufficient time to complete their current efforts; in particular,
efforts of the uprating credits committee.
Response: Western and Reclamation believe a 30-day delay in the
implementation of the proposed rate methodology until November 1, 1995,
would be in the best interest of the BCP Contractors. The 30-day delay
allowed the Colorado River Commission of Nevada (CRC) to obtain the
August 16, 1995, approval by the BCP E&OC of a request concerning CRC's
uprating credit carryforward balance and allow Western to incorporate
the resulting changes from CRC's request into the PRSS. Also, in
addition, the delay is taken in response to public comments for
additional review and comment time and the delay in the enactment of
the BCP Implementation Agreement. Upon completion of the current
efforts on the uprating credit committee, Western believes that further
changes to the uprating credit schedules can be incorporated into the
PRSS and the FY 1996 Rate Year Annual Revenue Requirement can be
adjusted accordingly at that time.
Issue: A customer suggested that if sufficient revenue reductions
are achieved through the efforts of the current committees to
potentially warrant a rate reduction for FY 96, Western should,
instead, consider carrying these revenues over into FY 1997 in order to
mitigate the effect of the Hoover Visitor Facilities on that year's
rates.
Response: As under the existing rate methodology, the proposed rate
methodology provides that any revenue over or under the Annual Revenue
Requirement is carried forward into the next year and increases or
decreases that year's Annual Revenue Requirement. The revenue carried
forward in any given year lowers the total Annual Revenue Requirement
for the next year, and does not act as a credit for any one specific
item, such as the visitor facilities. Western cannot deviate from the
methodology as agreed to by all the BCP Contractors in the BCP
Implementation Agreement.
Issue: A customer does not agree that the savings which may come
about as a result of an increase in generation of energy or a reduction
in costs should be carried over into FY 1997.
Response: Western agrees. As indicated previously, any savings in 1
year, which result in excess revenue being collected, is automatically
carried forward to the next year.
Issue: Some customers believe there is no need for a rate increase;
instead, there should be a reduction for FY 1996. It is believed that
Reclamation and Western can safely operate and maintain the BCP for FY
1996 using the rates currently in effect.
Response: Western agrees that a rate increase is not justified for
FY 1996. Under the proposed rate methodology, Base Charge and
forecasted rates will be a reduction to the existing rates. The FY 1995
Ratebase PRSS projects the FY 1996 Rate Year Base Charge to be less
than the total energy and capacity revenues to be collected in FY 1995.
Issue: A customer asks the question whether it is necessary to
calculate or display rates in view of the requirement introduced by the
BCP Implementation Agreement that the amount collected for energy shall
equal one-half of revenue requirements with adjustments to offset past
imbalances irrespective of the quantities of energy produced. It
believes that the calculation and promulgation of rates continues to be
necessary as a consequence of provision of the regulations and
contracts as well as for practical reasons.
Response: Western agrees that the calculation of rates should
continue. The proposed rate methodology requires Western to calculate
the Annual Revenue Requirement, Base Charge, Forecast Energy Rate,
Forecast Capacity Rate, and Calculated Energy Rate. The forecasted or
calculated rates would be applied to services such as unauthorized
overruns, ML and SL, and excess energy.
Issue: Some customers support the proposal to adjust the rate upon
the completion of the Uprating credit discussions.
Response: Western anticipates that the Uprating credits for FY 1996
will decrease upon completion of the Uprating credits discussions. The
reductions are a result of the Uprating Program being declared
complete, which releases excess bond funds and a revision to the
calculation of the weighted average interest rate, used to determine
the non-bonding contractors' Uprating credits. Western believes that
the FY 1996 Base Charge can be adjusted upon completion of the Uprating
credit discussions and receipt of the revised Uprating schedules.
Issue: Some customers request that the proposed rates be
implemented as soon as possible.
Response: Western agrees that the new rate methodology needs to be
implemented as soon as possible. It is Western's intention to proceed
with the rate process and have the proposed rate methodology effective
November 1, 1995, on an interim basis.
Issue: Some customers support the option where the Uprating credit
carryforward balances are paid over a 3-year period.
Response: Western has incorporated this request into the FY 95 Rate
Base PRSS. The process to request the FY 1995 payments has been
initiated. It is to be noted that the payments incorporated in the PRSS
do not address the issue of interest on the Uprating carryforward
balance.
Issue: One customer believes that the proposed charges and rates
should provide for repayment of all overdue Uprating credits payments
with accrued interest.
Response: The Uprating credit procedures have not been completed.
Western believes upon completion of the procedures and receipt of
revised Uprating credit schedules this issue will be resolved.
Issue: One customer has offered to provide Western with expertise
and assistance in the light of Western's reorganization, changes in
budgets, and turnover.
Response: Western appreciates the offer for assistance. Western
recognizes there are opportunities for developing partnerships with our
customers and will be looking for opportunities through the
transformation process.
Issue: A customer comments that existing legal requirements, if
followed strictly, would result in an over collection of revenue as a
result of increased energy generation, requiring a mid-year adjustment.
Response: The BCP Implementation Agreement provides that Western
bill the BCP Contractors a monthly Base Charge, collecting no more than
the Total Annual Revenue Requirement. Under the new methodology,
revenue actually collected is not dependent upon the amount of energy
generated or the rate charged. Western is reviewing the regulations to
determine whether the customer's interpretation of the regulations is
valid. Upon completion of the review, Western will followup with the
Bureau of Reclamation and the BCP Contractors for further discussions
on this issue.
Hydrology
Issue: A customer believes the Master Schedule distributed on June
15, 1995, should be corrected since it has no operative effect until
October 1, 1995, as the power contracts provide in Section 5.58 for the
revision of the Master Schedule.
[[Page 57866]]
Response: The BCP Implementation Agreement provides that Western
will use the final Master Schedule, dated June of each year, to
calculate the Forecast Energy Rate and provide each contractor's
Monthly Energy Ratio used in calculating its monthly energy charge.
Western believes that any deviation from the June final Master Schedule
would have to be agreed to by all BCP Contractors, Western, and
Reclamation. The agreement would require an amendment to the BCP
Implementation Agreement.
Cost Containment
Issue: Reclamation's operation and maintenance, other expenses, and
replacements costs have been steadily increasing. The BCP
Implementation Agreement now ensures complete recovery of these costs.
What is Reclamation doing to reduce these costs and to improve its
efficiency?
Response: Reclamation is committed to improving its efficiency and
minimizing the costs associated with operation and maintenance, other
expenses, and replacements. To achieve this goal Reclamation is working
closely with the Budget Review Subcommittee of the E&OC.
Issue: There are an inordinate number of supervisors and
administrative employees in relation to the number of actual workers.
What is Reclamation doing to reduce these administrative and overhead
costs?
Response: Since the beginning of FY 1994, Reclamation has reduced
layering from as many as five layers in some areas of the organization,
to no more than two layers between any employee and the Regional
Director in the Regional office, and no more than three layers between
any employee and the Regional Director in the Area Offices.
Supervisory-to-employee positions have been reduced from one supervisor
to every 8 employees to one supervisor for every 15 employees. Several
positions and functions have been eliminated. The Lower Colorado Region
has reduced its FTE by 307 as of July 7, 1995, which represents an
overall 22-percent reduction.
Issue: One customer requests that Western and Reclamation agree to
not increase the total Annual Revenue Requirements for FY 1997 and FY
1998 above FY 1996 levels and set the goal to stabilize the charges
over the next 3-years.
Response: The BCP Implementation Agreement provides for a
collaborative budgetary review process through the E&OC. Western and
Reclamation believe that this is the appropriate forum to address
budgetary review by the BCP Contractors. When comparing the Annual
Revenue Requirement for FY 1996 with FY 1997 and FY 1998, note that a
$13 million carryover balance from FY 1995 is figured in the FY 1996
estimate. If the FY 1996 Annual Revenue Requirement (without adjustment
for the carryover balance) was used as the ceiling for FY 1997 and FY
1998, Western and Reclamation would have to postpone replacements that
are critical to operation of the project.
Working Capital
Issue: A customer believes there is no justification to have the
working capital fund and should be eliminated from the PRSS.
Response: The BCP Implementation Agreement provides for the Working
Capital to be adjusted to $3 million for the FY 1996 Rate Year. Under
Section 14.7 of the BCP Implementation Agreement, the Coordinating
Committee shall have the authority, pursuant to Section 11.4.3, to
increase or decrease the Working Capital.
Environmental Evaluation
In compliance with the National Environmental Policy Act of 1969,
42 U.S.C. 4321 et seq.; Council on Environmental Quality Regulations
(40 CFR Parts 1500-1508); and DOE NEPA Regulations (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.
Executive Order 12866
DOE has determined that this is not a significant regulatory action
because it does not meet the criteria of Executive Order 12866, 58 FR
51735. Western has an exemption from centralized regulatory review
under Executive Order 12866; accordingly, no clearance of this notice
by OMB is required.
Availability of Information
Information regarding this rate adjustment, including PRSSs,
comments, letters, memorandums, and other supporting material made or
kept by Western for the purpose of developing the power rates, is
available for public review in the Phoenix Area Office, Western Area
Power Administration, Office of the Assistant Area Manager for Power
Marketing, 615 South 43rd Avenue, Phoenix, Arizona 85009-5313; Western
Area Power Administration, Division of Power Marketing, 1627 Cole
Boulevard, Golden, Colorado 80401; and Western Area Power
Administration, Office of the Assistant Administrator for Washington
Liaison, Room 8G-027, Forrestal Building, 1000 Independence Avenue SW.,
Washington, DC 20585.
Submission to Federal Energy Regulatory Commission
The charges and rates herein confirmed, approved, and placed into
effect on an interim basis, together with supporting documents, will be
submitted to FERC for confirmation and approval on a final basis.
Order
In view of the foregoing and pursuant to the authority delegated to
me by the Secretary of Energy, I confirm and approve on an interim
basis, effective November 1, 1995, Rate Schedule BCP-F5 for the Boulder
Canyon Project. The rate schedule shall remain in effect on an interim
basis, pending Federal Energy Regulatory Commission confirmation and
approval of it or a substitute rate on a final basis, through September
30, 2000.
Issued in Washington, DC, October 31, 1995.
Charles B. Curtis,
Deputy Secretary.
Boulder Canyon Project Schedule of Rates for Firm Power Service
Effective: The first day of the first full billing period beginning
on or after November 1, 1995, and remaining in effect through September
30, 2000, or until superseded.
Available: In the marketing area serviced by the Boulder Canyon
Project (BCP).
Applicable: To power customers served by the BCP supplied through
one meter at one point of delivery, unless otherwise provided by
contract.
Character and Condition of Service: Alternating current at 60
hertz, three-phase, delivered and metered at the voltages and points
established by contract.
Base Charge: Energy Charge: Each Contractor shall be billed monthly
an energy charge equal to the Rate Year Energy Dollar multiplied by the
Contractor's Firm Energy percentage multiplied by the Contractor's
Monthly Energy Ratio as provided by contract.
Capacity Charge: Each Contractor shall be billed monthly a capacity
charge equal to the Rate Year Capacity Dollar divided by 12 multiplied
by the Contractor's Contingent Capacity percentage as provided by
contract.
Forecast Rates: Energy: Shall be equal to the Rate Year Energy
Dollar divided by the lesser of the Total Master Schedule Energy or
4,501.001 megawatthours. This rate is to be
[[Page 57867]]
applied for use of excess energy, unauthorized overruns, and water pump
energy.
Capacity: Shall be equal to the Rate Year Capacity Dollar divided
by 1,951,000 kilowatts, to be applied for use of unauthorized overruns.
Calculated Energy Rate: Within 90 days after the end of each Rate
Year, a Calculated Energy Rate shall be calculated. If the Energy
Deemed Delivered is greater than 4,501.001 megawatthours, then the
Calculated Energy Rate shall be applied the each Contractor's Energy
Deemed Delivered. A credit or debit shall be established based on the
difference between the Contractor's Energy Dollar and the Contractor's
Actual Energy Charge, to be applied the following month calculated or
as soon as possible thereafter.
Lower Basin Development Fund Contribution Charge: The Contribution
Charge is 4.5 mills/kWh for each kWh measured or scheduled to an
Arizona purchaser and 2.5 mills/kWh for each kWh measured or scheduled
to a California or Nevada purchaser, except for purchased power.
Billing for Unauthorized Overruns: For each billing period in which
there is a contract violation involving an unauthorized overrun of the
contractual power obligations, such overruns shall be billed at 10
times the Forecast Energy Rate and Forecast Capacity Rate. The
Contribution Charge shall be applied also to each kWh of overrun.
Adjustments: None.
[FR Doc. 95-28534 Filed 11-21-95; 8:45 am]
BILLING CODE 6450-01-P
