[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Notices]
[Pages 70011-70013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32411]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Boulder Canyon Project-Base Charge and Rates
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of base charge and rates.
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SUMMARY: Notice is given of the confirmation and approval by the Deputy
Secretary of the Department of Energy (DOE) placing the Base Charge and
Rates for the Boulder Canyon Project (BCP) firm power into effect for
the fifth rate year under the current rate methodology pursuant to Rate
Schedule BCP-F5 as approved by the Federal Energy Regulatory Commission
(FERC) on April 19, 1996 (Rate Order No. WAPA-70). The Base Charge will
provide sufficient revenue to pay all annual costs, including interest
expense, and repayment of required investment within the allowable
period.
DATES: The Base Charge will be placed into effect on December 1, 1999,
and will be in effect through September 30, 2000.
FOR FURTHER INFORMATION CONTACT: Mr. Anthony Montoya, Power Marketing
Manager, Western Area Power Administration, Desert Southwest Customer
Service Region, 615 South 43rd Avenue, Phoenix, AZ 85009-5313, (602)
352-2789, or
SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved the
existing Base Charge for firm power service on September 19, 1997. The
existing Base Charge was calculated in accordance with the methodology
approved under Rate Order WAPA-70. In accordance with Section 13.13 of
the BCP Implementation Agreement, the rate methodology and calculated
rates for the first rate year and each fifth fiscal
[[Page 70012]]
year (FY) thereafter shall become effective on an interim basis upon
approval by the Deputy Secretary of Energy, subject to final approval
by FERC. The rates for the second, third, and fourth FYS for the BCP-F5
became effective on a final basis upon approval by the Deputy
Secretary. The rates for the fifth FY (FY 2000) shall become effective
on a final basis upon approval by the Deputy Secretary. The FY 2000
Base Charge represents the charges for the fifth FY since FERC approval
of the current rate methodology.
The Procedures for Public Participation in Power and Transmission
Rate Adjustments and Extensions, 10 CFR part 903, have been followed by
Western in determining the Base Charge. The FY 2000 Base Charge for BCP
firm power is based on an Annual Revenue Requirement of $46,145,334.
The Base Charge consists of an energy dollar of $23,860,434.50, a
forecasted energy rate of 4.59 mills/kWh, a capacity dollar of
$22,284,899.50, and a forecasted capacity rate of $0.95 per
kilowattmonth (kWmonth).
The following summarizes the steps taken by Western to ensure
involvement of all interested parties in the determination of the Base
Charge and Rates:
1. The proposed rate adjustment was initiated on February 22, 1999,
when a letter announcing an informal customer meeting was mailed to all
BCP Contractors. The informal meeting was held on March 9, 1999, in
Phoenix, Arizona. At this informal meeting, Western explained the
rationale for the rate adjustment, presented the FY 2000 Base Charge
and Forecast Capacity and Energy Rates, and answered questions.
2. A Federal Register notice was published on March 24, 1999 (64 FR
14227), officially announcing the proposed rates for BCP, initiating
the public consultation and comment period, and announcing the public
information forum and public comment forum.
3. On March 24, 1999, letters were mailed from Western's Desert
Southwest Regional Office to all BCP Contractors and interested
parties, transmitting the Federal Register notice of March 24, 1999 (64
FR 14227), and announcing the times and locations for the two public
forums.
4. On April 13, 1999, letters were mailed from Western's Desert
Southwest Regional Office to all BCP Contractors and interested
parties, transmitting a package of updated information related to the
FY 2000 Base Charge and Forecast Capacity and Forecast Energy Rates
compiled since the March 9, 1999, informal customer meeting.
5. On April 21, 1999, beginning at 10 a.m., a public information
forum was held at Western's Desert Southwest Regional Office in
Phoenix, Arizona. At the public information forum, Western provided
detailed explanations of the proposed FY 2000 Base Charge and Forecast
Capacity and Forecast Energy Rates for BCP, identified the issues that
could change the proposed FY 2000 Base Charge and Forecast Capacity and
Forecast Energy Rates, and answered questions. A rate information
handout was provided at the forum.
6. On May 18, 1999, letters were mailed from Western's Desert
Southwest Regional Office to all BCP Contractors and interested
parties, transmitting a package of responses to data requests and
questions from the April 21, 1999, public information forum.
7. On June 2, 1999, beginning at 10:30 a.m., a public comment forum
was held at Western's Desert Southwest Regional Office in Phoenix,
Arizona. A handout containing information regarding the updated FY 2000
Base Charge and Forecast Capacity and Forecast Energy Rates was
provided. After providing this information, Western gave the public an
opportunity to comment for the record. Three representatives made oral
comments.
8. Two comment letters were received during the 90-day consultation
and comment period. The consultation and comment period ended June 22,
1999. All formally submitted comments have been considered in
developing the Base Charge for FY 2000. Written comments were received
from the following sources:
Irrigation and Electrical Districts Association of Arizona (Arizona)
Metropolitan Water District of Southern California (California)
The comments and responses, paraphrased for brevity, are presented
below:
Civil Service Retirement Costs and Post-Retirement Health and Life
Insurance Benefits
Comment: Western received comments related to Western's lack of
authority to collect the unfunded portion of the Civil Service
Retirement Costs and Post-Retirement Health and Life Insurance Benefits
in this rate process. Specifically, the Contractors assert that funds
collected for these costs for the BCP would have to be deposited into
the Colorado River Dam Fund (CRDF) and could not be transferred to a
general fund account managed by the Office of Personnel Management.
Accordingly, the Contractors believe that collection of these costs is
inappropriate. The Contractors are also concerned that proper tracking
of these funds is also needed to ensure they are being used only for
BCP and are not lost in a general fund.
Response: Under a legal opinion provided by the General Counsel of
the DOE by memorandum dated July 1, 1998, the Power Marketing
Administrations (PMAs) have the authority to collect, through the
rates, the full costs of the Retirement Benefits. In addition, the FERC
has issued at least two orders approving the inclusion of such costs in
PMA rates; Western Area Power Administration (Intertie Project), 87
FERC para. 61,346, at 62,337-62,338 (1999), and Southeastern Power
Administration, 86 FERC para. 61,195, at 61,681 (1999). Based on the FY
1999 data currently available, a total of $1.3 million is expected to
be collected for these retirement costs for FY 2000, which represents
approximately 3 percent of the BCP revenue requirement. Western has
previously recovered $1.3 million for Civil Service Retirement Costs
and Post-Retirement Health and Life Insurance Benefits costs in FY 1998
and anticipates recovering another $1.3 million in FY 1999. Under the
provisions of the Boulder Canyon Project Adjustment Act, 43 U.S.C. 618,
et seq., all receipts from the BCP shall be paid into the CRDF and are
available for defraying the costs of operation. Western will continue
to deposit these funds into the CRDF in compliance with these
authorities.
Visitor Center
Comment: A Contractor continues to be concerned that the Visitor
Center net revenues are not yet sufficient to fund the agreed-upon 50
percent amortization of the Visitor Center investment.
Response: The Bureau of Reclamation is currently working toward
providing the detail necessary to show Government and Contractor
responsibility for repayment of the final cost of the Visitor
Facilities as required by the Implementation Agreement. Updated final
estimated cost information was presented at the August 1999
Coordination Meeting. There has been a dramatic increase in the amount
of revenue collected in recent years. Revenues collected in excess of
expenses totaled $900,000 in FY 1996, $2.4 million in FY 1997, and $5.2
million in FY 1998. Reclamation will continue to research and implement
new revenue proposals, and carefully monitor expenses, with a goal of
recovering 50 percent of the Visitor
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Facilities investment with interest. Western will continue to include
these revenues in the power repayment study as they are received.
Joint Planning Study Costs
Comment: A Contractor continues to address concern for costs
incurred under the Joint Planning Agreement (JPA) for future
transmission and generation project studies, which the contractor
asserts are being allocated inappropriately to the BCP Contractors. The
Contractor believes these study costs, in addition to the costs
required for any transmission upgrades to the system (generator
addition, transmission interconnection, etc.), should be charged to the
project sponsors or included in Western's Open Access Tariff (OAT)
rates. The Contractor also states whether the study costs are charged
to the project sponsors or included in the OAT rates, the JPA study
costs to date should be tracked and reimbursed to the BCP Contractors.
Response: Western agrees that study work which is project specific
to a new line in Western's system, or an interconnection to Western's
system, should and will be charged to the entity requesting the
interconnection or to the Project (Parker-Davis, Intertie, Boulder
Canyon, Colorado River Storage Project) which is being upgraded. Study
work charges for the Mead Fault 230-kV duty studies will be charged to
the projects shown to impact the system causing the upgrade. After
completion of the contracts with those entities causing the impact,
Western will be able to move the charges from the BCP, and other
Projects, to the entities causing the needed upgrade.
If a project is not interconnecting to Western's system but could
potentially cause an impact from one or more busses away, Western will
have to perform studies and participate in study groups to assure our
needs are considered and met. Often these situations do not enable
Western to pass along study costs to the project. In these cases the
costs are applied to those Projects on Western's system that are most
impacted.
If studies work is of a general nature, Western reserves the
authority to assign costs to the Project influenced by the project
involved. Work on the California Independent System Operator, the
Nevada Independent Scheduling Administrator, and the Arizona
Independent Scheduling Administrator is of a general nature. BCP will
receive charges from work on these efforts since they pertain to the
use of Hoover in their operations, as well as other transmission and
generation issues. BCP's participation is 15 percent of the total cost
of the efforts. Western's efforts in the Western Systems Coordinating
Council and other reliability forums will also be charged based on the
distribution formula for general efforts. In recent years, due to
deregulation and significant systems changes, Western has been required
to expend an increasing effort to address and protect system
reliability.
Finally, the Contractor seems to have misconstrued the nature of
the JPA. The JPA is a forum to review projects being considered by JPA
signatories to coordinate and collaborate. Studies are performed on
upgrades or new initiatives, charged to the appropriate Project,
presented and discussed in the JPA committee meetings, and finalized in
the annual JPA meeting before becoming a part of Western's system
plans. The JPA has also been used as a forum to keep JPA signatories
and other interested parties aware of activities impacting the systems.
By Amendment No. 3 to Delegation Order No. 0204-108, published
November 10, 1993 (58 FR 59716), the Secretary of Energy 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 of Energy; and (3) the authority to
confirm, approve, and place into effect on a final basis, to remand, or
to disapprove such rates to FERC. By subsequent Order effective April
15, 1999, the Secretary rescinded all delegations of authority to the
Deputy Secretary, whether contained in Delegation Orders, Departmental
Directives, or elsewhere, concerning the Department's Power Marketing
Administrations, including, but not limited to, authority delegated or
affirmed in Delegation Order No. 0204-108, as amended. However, on
November 24, 1999, in Delegation Order No. 0204-172 the Secretary
reinstate the authority delegated to the Deputy Secretary in Amendment
No. 3 to Delegation Order No. 0204-108, which had been rescinded by his
April 15, 1999, Order.
These charges and rates are established pursuant to section 302(a)
of the DOE Organization Act, 42 U.S.C. 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. 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. 485h(c), and other acts
specifically applicable to the project system involved, were
transferred to and vested in the Secretary.
Dated: December 3, 1999.
T.J. Glauthier,
Deputy Secretary.
[FR Doc. 99-32411 Filed 12-14-99; 8:45 am]
BILLING CODE 6450-01-P
