E5-7438. Parker-Davis Project-Post-2008 Resource Pool Allocation Procedures

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of final procedures.

SUMMARY:

The Western Area Power Administration (Western), a Federal power marketing agency of the Department of Energy (DOE), announces the Parker-Davis Project (P-DP) Post-2008 Resource Pool Allocation Procedures, developed under the requirements of the Energy Planning and Management Program (EPAMP). EPAMP provides for the establishment of project-specific resource pools and power allocations from these pools to new preference customers. Western, under EPAMP, is finalizing procedures for use in allocating power from the P-DP Post-2008 Resource Pool that will become available October 1, 2008. Western originally proposed allocation procedures in the October 1, 2004, Federal Register. Responses to public comments received on the proposed procedures are included in this notice. In accordance with this notice, Western plans to announce proposed allocations in the Federal Register after April 1, 2006.

DATES:

The P-DP Post-2008 Resource Pool Allocation Procedures will become effective January 17, 2006.

ADDRESSES:

Information regarding the Post-2008 Resource Pool Allocation Procedures, including comments, letters, and other supporting documents made or kept by Western for the purpose of developing the final procedures, is available for public inspection and copying at the Desert Southwest Regional Office, Western Area Power Administration, located at 615 South 43rd Avenue, Phoenix, AZ 85009. Public comments may be viewed at http://www.wapa.gov/​dsw/​pwrmkt.

SUPPLEMENTARY INFORMATION:

Western published a notice of proposed allocation procedures in the October 1, 2004, Federal Register (69 FR 58900), to implement Subpart C—Power Marketing Initiative (PMI) of EPAMP's Final Rule, 10 CFR part 905 (60 FR 54151). EPAMP, developed in part to implement section 114 of the Energy Policy Act of 1992, became effective on November 20, 1995. The goal of EPAMP is to require planning and efficient electric energy use by Western's long-term firm power customers and to provide a framework for extending Western's firm power resource commitments. One aspect of EPAMP is to establish project-specific power resource pools when existing resource commitments expire and to allocate power from these pools to new preference customers. Existing resource commitments for the P-DP expire on September 30, 2008. Western published its decision to apply the PMI of EPAMP to the P-DP in the Federal Register on May 5, 2003 (68 FR 23709). This decision created a resource pool of approximately 17 megawatts (MW) of summer season capacity and 13 MW of winter season capacity, based on estimates of current P-DP hydroelectric resource availability, for allocation to eligible preference customers for 20 years beginning October 1, 2008. Western will make allocations to preference customers under the final procedures described in this notice, the current P-DP Marketing Plan (49 FR 50582, 52 FR 7014, and 52 FR 28333), and EPAMP. These final Post-2008 Resource Pool Allocation Procedures for the P-DP address (1) Eligibility criteria, (2) how Western intends to allocate pool resources, and (3) the terms and conditions under which Western will allocate the power pool.

Western held public comment forums regarding the proposed procedures between November 30, 2004, and December 2, 2004, to accept oral and written comments on the proposed allocation procedures and call for applications. The formal comment period ended January 30, 2005. Western's responses to public comments on the proposed allocation procedures are included in this notice.

Response to Comments on the Post-2008 Resource Pool Allocation Procedures

Comments and Responses

Comment: Some comments expressed support for the proposed order of priority for use in making allocations, specifically the exclusion of existing Firm Electric Service contractors from the first priority.

Response: Western appreciates the support and agrees that this order of priority will facilitate the widespread use of hydropower resources.

Comment: Western received comments that subcontractors receiving allocations of Boulder Canyon Project power should be considered as having a contract with Western or as a member of a parent entity that has a contract with Western.

Response: Western agrees that the definition of “a member of a parent entity that has a contract with Western” includes the Boulder Canyon Project subcontractors (or suballottees). These subcontractors receive the benefits of Federal power resources through power contracts with Boulder Canyon Project contractors and would not meet the criteria to receive first priority consideration.

Comment: Western received comments that applicants may receive standard retail service from electric service providers and have no contract with their electric service providers for Federal resources. These comments asserted that the status of their electric service providers as contractors for Federal resources should not disqualify such retail customers from being in the first priority for consideration unless the applicants otherwise receive specified benefits from federal resources.

Response: Retail customers of an electric service provider are not intended to be included in the definition of “member of a parent entity.” Therefore, otherwise qualified applicants would not be disqualified from being in the first priority for consideration solely on the basis of the applicant's retail service provider having a contract with Western for Federal resources. To encourage widespread use of Federal resources, Western may consider the magnitude of direct or indirect benefits from Federal resources received by applicants in determining allocations.

Comment: One comment suggested that resource pool allocations should be given to applicants previously unsuccessful in obtaining a Federal power allocation.

Response: In the October 1, 2004, Federal Register notice, Western provided an order of priority for use in determining which qualified applicants would receive consideration for P-DP resource pool allocations. The first order of priority contains those applicants that do not have contracts with Western for Federal power resources or are not members of parent entities that have a contract with Western for Federal power. This category would include those qualified applicants within the marketing area that have been previously unsuccessful at obtaining a contract with Western for Federal power resources.

Comment: Comments were received requesting that Western consider making allocations to municipalities, that are not utilities, for identified end-use loads, such as water, waste water, street lighting, and municipal facilities.

Response: Western's historic practice has been to require electrical utility status for municipalities to be eligible to receive Federal power under the preference clause. This requirement is contained in EPAMP, and utility status will continue as a requirement for municipalities to receive a preference allocation. For the P-DP, Western will consider making allocations to municipal utilities, other than electrical utilities, that are recognized as utilities by their applicable legal authorities, are nonprofit in nature, have electrical facilities, and are independently governed and financed.

Comment: Western received comments that applicants should not be required to meet utility status before Western determines who will receive allocations.

Response: Western must know prior to publishing proposed allocations whether applicants have attained utility status. To accommodate applicants that may need more time, Western has decided to extend the deadline for attaining utility status to April 1, 2006.

Comment: Western received a comment that applicants with direct use needs such as irrigation districts should not be required to meet utility status.

Response: The October 1, 2004, Federal Register notice stated that “qualified applicants that desire to purchase power from Western for resale to consumers * * * must have utility status.” Utility status means that the applicant has responsibility to meet load growth, has a distribution system, and is ready, willing, and able to purchase power from Western on a wholesale basis for resale to retail consumers. Electrical districts, as well as certain irrigation districts, resell power to retail consumers and, therefore, must meet utility status requirements. Irrigation districts desiring power allocations entirely for direct use loads, which are owned and controlled by these entities, are not required to have utility status as they are not required to distribute power to members that are preference entities or to retail consumers.

Comment: A comment suggested that partial requirements customers of entities with allocations of Federal resources should receive special consideration as compared to full requirements customers of such entities.

Response: Western's consideration of an application for an allocation will not differentiate between a partial requirements customer and a full requirements customer of an entity that has a contract for Federal resources. The amount of any Western power allocation could be affected by the magnitude of benefit received from the Federal resources, which could be impacted by the applicant's status as a partial requirements customer versus as a full requirements customer.

Comment: Comments stated that the future, projected load of applicants should be considered when making the determination as to which applicants should get an allocation and how much power to allocate.

Response: In the October 1, 2004, Federal Register notice, Western stated that it would base allocations made to qualified applicants on the actual loads in calendar year 2003. This practice enables Western to more accurately determine allocations and the benefits derived from those allocations, as opposed to consideration of future projected loads, which may or may not be realized. Western will allow applicants to provide updated load data if they desire. Applicants may provide the most recent 12 months of actual load data, which must be received by Western no later than April 1, 2006. In addition, applicants may also provide any other updated or new information relevant to their applications no later than April 1, 2006.

Comment: A comment said that any power remaining unallocated or not placed under contract should be offered to the contractors that contributed the power to the resource pool.

Response: Resource pool power not placed under contract will be offered on a pro rata basis to existing contractors up to the amount they contributed to the resource pool. Beyond that, any remaining resource pool power will be used as determined by Western.

Comment: A comment stated that the entire resource pool should be allocated to Native American applicants.

Response: Native American tribal applicants will be considered for allocations along with all other eligible applicants.

Comment: A comment said that the proposed 1-MW minimum allocation should be decreased or eliminated.

Response: The current marketing plan criteria include a 1-MW minimum for new customer allocations (52 FR 28333, July 29, 1987). This 1-MW minimum recognizes that Western does not schedule power to entities in quantities of less than 1 MW. Because of this and because small customer allocations were rounded to an even megawatt in the May 5, 2003, Federal Register notice (68 FR 23711), Western will continue the 1-MW minimum allocation provision.

Comment: Comments suggested that aggregating or pooling loads of different applicants should be allowed to meet the proposed 1-MW minimum allocation.

Response: Applicants will be allowed to aggregate their loads to qualify for an allocation of P-DP power provided Western is able to schedule power deliveries in 1 MW or greater quantities to the aggregated group. Applicants that aggregate loads will be required to demonstrate to Western's satisfaction that a contractual aggregated arrangement is in place by April 1, 2006. Members of an aggregated group must individually and collectively meet preference status and all other eligibility requirements. Western does not intend to allocate power to aggregated loads that are retail in nature.

Comment: Some comments supported the provision requiring contractors to pay Western in advance for firm electric service.

Response: Western appreciates support for the contract provision requiring contractors to pay their firm electric service bills 1 month in advance, unless both parties mutually agree to pay more than 1 month in advance.

Comment: Comments expressed understanding for the requirement to reimburse existing contractors that provided advanced funding for certain capital items.

Response: Western appreciates support and recognition of the obligation to reimburse existing contractors for any undepreciated replacement advances, to the extent existing contractors' allocations are reduced to create the resource pool.

Comment: Comments requested clarification of the transmission arrangements necessary to deliver P-DP power allocations from P-DP point(s) of delivery to applicants' loads.

Response: As stated in the October 1, 2004, Federal Register notice, each customer is ultimately responsible for arranging third-party delivery of firm power beyond P-DP point(s) of delivery. Western may assist new applicants, upon request, in facilitating third-party arrangements for delivery of allocated firm power, which may include transmission and/or displacement power delivery arrangements. Applicants must have the necessary arrangements for transmission, displacement, and/or distribution service in place by April 1, 2008.

Comment: Western received a comment requesting clarification of the transmission and/or distribution requirements of those applicants that purchase for resale to consumers versus those that purchase for end use purposes.

Response: All applicants, including those that purchase power from Western for end use purposes only, must have the necessary arrangements for transmission, displacement and/or distribution service in place by April 1, 2008. Applicants that purchase power for resale to consumers must have electrical utility status; which means the applicant has the responsibility to meet load growth, has a distribution system, and is ready, willing and able to purchase Federal power from Western on a wholesale basis for resale to retail consumers. To meet this electrical utility status requirement, Western will require applicants that purchase power for resale to consumers to either own or lease their distribution systems. The deadline for attaining utility status has been extended to April 1, 2006.

Comment: Comments were received stating that Western should allow bill crediting to accommodate end-use applicants that will not attain utility status.

Response: Under EPAMP, Western reserved the right to provide the economic benefits of its resources to Native Americans directly, in the event unanticipated obstacles to delivery of hydropower benefits arise. Bill crediting is an example of a direct benefit extended to Native Americans. Western's flexibility to provide direct economic benefits under EPAMP is expressly limited to Native Americans.

Comment: A comment stated that the San Luis Rey Indian Water Authority (Water Authority), as a congressionally recognized tribal entity, should have the same preference eligibility as Federally recognized tribes.

Response: As a result of the San Luis Rey Indian Water Rights Settlement Act of 1988, the Water Authority was recognized by Congress as “an Indian entity under Federal law with which the United States has a trust relationship.” Because of this and because the tribes that comprise the Water Authority are Federally recognized, Western does regard the Water Authority as a recognized tribal entity for the purposes of this process.

Comment: A comment suggested that the P-DP marketing area should include the City of Page, Arizona.

Response: The P-DP marketing area was not altered by the decision to apply EPAMP to the Post-2008 Resource Pool. The P-DP marketing area excludes the portion of the State of Arizona lying in the Upper Colorado River Basin, except for that portion in which the Navajo Generating Station is located. Navajo Generating Station is included in the marketing area as a resource only. The City of Page lies within the Upper Colorado River Basin and is, therefore, located outside of the P-DP marketing area.

Comment: Comments said contractors should have sufficient notice and opportunity to comment, discuss, cure and appeal any decision by Western's Administrator to adjust power resource allocations during the contract term of the P-DP contract extensions.

Response: Western addressed these concerns in the revision to the General Power Contract Provisions, effective on June 15, 2005.

Final Post-2008 Resource Pool Allocation Procedures

These final procedures for the P-DP resource pool address (1) eligibility criteria, (2) how Western intends to allocate pool resources, and (3) the terms and conditions under which Western will allocate the power pool.

I. Amount of Pool Resources

As of October 1, 2008, Western will allocate, as long-term firm power to eligible preference entities, approximately 17 MW of summer season capacity and 13 MW of winter season capacity, based on estimates of current P-DP hydroelectric resource availability. Firm power means capacity and associated energy allocated by Western and subject to the terms and conditions specified in the Western P-DP electric service contract. The associated energy will be a maximum of 3,441 kilowatthours per kilowatt (kWh/kW) in summer and 1,703 kWh/kW in winter, based on current marketing plan criteria. This new resource pool includes 0.869 MW of summer withdrawable capacity and 0.619 MW of winter withdrawable capacity. Withdrawable power is power reserved for United States priority use, but not presently needed. Priority use power is capacity and energy required for the development and operation of Bureau of Reclamation (Reclamation) projects as required by legislation, and irrigation pumping on certain Indian lands. Reclamation may submit a request to Western for priority use withdrawals, at which time Western will substantiate that the power to be withdrawn will be used for the purposes specified in the P-DP Marketing Plan Criteria (49 FR 50582). Thereafter, upon a 2-year written notice, Western may withdraw the necessary amount of power on a pro rata basis, which would subsequently reduce each contractor's withdrawable portion of its power allocation.

II. General Eligibility Criteria

Western will apply the following general eligibility criteria to applicants seeking a firm power allocation under the Post-2008 Resource Pool Allocation Procedures:

A. Qualified applicants must be preference entities as defined by section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), as amended and supplemented.

B. First consideration will be given to qualified applicants in the P-DP marketing area that do not have a contract with Western for Federal power resources or are not a member of a parent entity that has a contract with Western for Federal power resources.

C. Qualified applicants, except Native American tribes, must be ready, willing and able to receive and distribute or use power from Western. Ready, willing, and able means that the potential contractor has the facilities needed to receive power or has made the necessary arrangements for transmission, displacement, and/or distribution service; and the potential contractor's power supply contracts with third parties permit the delivery of Western's power (60 FR 54173). Applicants must have the necessary arrangements for transmission, displacement, and/or distribution service in place by April 1, 2008.

D. Qualified applicants (including cooperatives, public utility districts, public power districts and municipalities) desiring to purchase power from Western for resale to consumers must have electrical utility status by April 1, 2006. Native American tribes are not subject to this requirement. Electrical utility status means the applicant has responsibility to meet load growth, has a distribution system and is ready, willing, and able to purchase Federal power from Western on a wholesale basis for resale to retail consumers. For the P-DP, Western will consider making allocations to municipal utilities, other than electrical utilities, that are recognized as utilities by their applicable legal authorities, are nonprofit in nature, have electrical facilities, and are independently governed and financed.

E. A qualified Native American applicant must be an Indian tribe as defined in the Indian Self Determination Act of 1975, 25 U.S.C. 450b, as amended.

III. General Allocation Criteria

Western will apply the following general allocation criteria to applicants seeking an allocation of firm power under the Post-2008 Resource Pool Allocation Procedures.

A. Allocations of firm power will be made in amounts as determined solely by Western in exercising its discretion under Federal Reclamation Law.

B. An allottee may begin service to purchase firm power only upon the execution of an electric service contract between Western and the allottee, and satisfaction of required conditions in that contract.

C. Firm power will be allocated under these procedures to qualified applicants in accordance with preference provisions of section 9(c) of the Reclamation Project Act of 1939, in the following order of priority:

1. Preference entities in the P-DP marketing area that do not have a contract with Western for Federal power resources or are not a member of a parent entity that has a contract with Western for Federal power resources.

2. Preference entities in the P-DP marketing area that have a contract with Western for Federal power resources or are a member of a parent entity that has a contract with Western for Federal power resources.

3. Preference entities in adjacent Federal marketing areas that do not have a contract with Western for Federal power resources or are not a member of a parent entity that has a contract with Western for Federal power resources.

D. The P-DP marketing area includes:

• All of the drainage area considered tributary to the Colorado River below a point 1 mile downstream from the mouth of the Paria River (Lee's Ferry).
• The State of Arizona, excluding that portion lying in the Upper Colorado River Basin, except for that portion of the Upper Colorado River Basin in which the Navajo Generating Station is located. The Navajo Generating Station is included in the power marketing area as a resource only.
• 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.
• 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.
• 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.

For a map of the P-DP marketing area, visit Western's Web site at http://www.wapa.gov/​dsw/​pwrmkt.

E. Western will base allocations made to qualified applicants on the actual loads in calendar year 2003 or the most recent 12 months of actual load data, if received by Western no later than April 1, 2006. Western will apply current marketing plan criteria and EPAMP criteria to these loads, except as stated in this notice.

F. Western will base allocations made to Native American tribes on their actual loads in calendar year 2003 or the most recent 12 months of actual load data, if received by Western no later than April 1, 2006. Western has the right to use estimated load values should actual load data not be available. Western will review and adjust, where necessary, inaccurate estimates received during the allocation process.

G. New contractors must execute electric service contracts within 6 months of receiving a contract offer from Western, unless Western agrees otherwise in writing.

H. The resource pool will be dissolved subsequent to the closing date for executing firm power contracts. Firm power not placed under contract will be offered on a pro rata basis to existing contractors up to the amount they contributed to the resource pool. Beyond that, any remaining power will be used as determined by Western.

I. The minimum allocation shall be 1,000 kilowatts (kW).

J. Applicants seeking an allocation as an aggregated group must demonstrate to Western's satisfaction the existence of a contractual aggregation arrangement by April 1, 2006. Members of an aggregated group must individually and collectively meet preference status and all other eligibility requirements.

K. If unanticipated obstacles to the delivery of hydropower benefits to Native American tribes arise, Western will allow the economic benefits of the resource to be directly provided to the tribes.

IV. General Contract Principles

Western will apply the following general contract principles to all applicants receiving an allocation of firm power under the Post-2008 Resource Pool Allocation Procedures.

A. Western reserves the right to reduce the withdrawable portion of a contractor's contract rate of delivery, upon a 2-year notice of a request by Reclamation for additional priority use power needed to serve project pumping requirements or irrigation pumping on certain Indian lands.

B. Western, at its discretion and sole determination, reserves the right to adjust the contract rate of delivery on 5 years' written notice in response to changes in hydrology and river operations. Such adjustments will only take place after Western conducts a public process.

C. Each applicant is ultimately responsible for arranging third-party delivery. Western may assist new applicants, upon request, in facilitating third-party transmission and/or displacement arrangements for delivery of firm power allocated under these contracts.

D. The Contractor shall not sell any of the firm electric power or energy allocation to any electric utility customer of the Contractor for resale by that utility customer. The Contractor may sell the electric power and energy allocation to its members on condition that said members not sell any of said power and energy to any customer of the members for resale by that customer.

E. Contracts entered into under the Post-2008 Resource Pool Allocation Procedures will provide for Western to furnish firm electric service effective from October 1, 2008, through September 30, 2028.

F. Contractors will be required to pay 1 month in advance for firm electric service. If both parties mutually agree, payments of more than 1 month in advance may be allowed.

G. To the extent existing contractors' power allocations are reduced to create the resource pool, new contractors will be required to reimburse existing contractors for undepreciated replacement advances.

H. Applicants that aggregate their loads will be required to enter into a single firm power contract with Western, with the aggregated group entity as the contracting Party.

I. Contracts entered into as a result of these final procedures will incorporate Western's standard provisions for power sales contracts, including integrated resource planning, and the General Power Contract Provisions.

VI. Review Under the Regulatory Flexibility Act

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

VII. Small Business Regulatory Enforcement Fairness Act

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

VIII. Determination Under Executive Order 12866

Western has an exemption from centralized regulatory review under Executive Order 12866; accordingly, no clearance of this notice by the Office of Management and Budget is required.

IX. Environmental Compliance

Western has completed an environmental impact statement on EPAMP, following the National Environmental Policy Act of 1969 (NEPA). The Record of Decision was published in 60 FR 53181, October 12, 1995. Western's NEPA review assured all environmental effects related to these actions have been analyzed.

Dated: December 1, 2005.

Michael S. Hacskaylo,

Administrator.