[Federal Register Volume 60, Number 41 (Thursday, March 2, 1995)]
[Notices]
[Pages 11667-11670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4880]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Provo River Project Notice of Rate Order No. WAPA-65
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of Rate Order--Provo River Project.
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SUMMARY: Notice is given of the confirmation and approval by the Deputy
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-65
placing into effect a formula for determining annual, power-related
payments for the Provo River Project (PRP) of the Western Area Power
Administration (Western) on an interim basis. The formula will remain
in effect on an interim basis until the Federal Energy Regulatory
Commission (FERC) confirms, approves, and makes it effective on a final
basis or until it is replaced by another method.
Statement of Revenue and Related Expenses
The power-related revenue requirements for the Provo River Project
(PRP) will be based upon projections contained in the annual power
repayment study (PRS). Differences between estimated and actual costs
will be adjusted when final financial data becomes available. The
following table is based on the fiscal year (FY) 1994 preliminary PRS
and provides a [[Page 11668]] summary of estimated revenue and cost
data through the proposed 5-year approval period.
Provo River Project--Total 5-Year Projections, Revenues and Costs
[$1,000]
------------------------------------------------------------------------
Total FY
1995-99
projections
------------------------------------------------------------------------
Total Revenues....................................... 1,341
------------
Costs:
O&M...................................................... 959
Transmission............................................. 155
Interest................................................. 136
Investment Repayment..................................... 91
------------
Total Costs.......................................... 1,341
------------------------------------------------------------------------
DATES: The formula will be effective on an interim basis beginning
April 1, 1995, and remain in effect until FERC confirms, approves, and
places it into effect on a final basis for a 5-year period, or until it
is superseded.
FOR FURTHER INFORMATION CONTACT:
Mr. Kenneth G. Maxey, Area Manager, Salt Lake City Area Office,
Western Area Power Administration, P.O. Box 11606, Salt Lake City, UT
84147-0606, (801) 524-5493 or
Mr. Edmond Chang, Assistant Area Manager, for Power Marketing, Salt
Lake City Area Office, Western Area Power Administration, P.O. Box
11606, Salt Lake City, UT 84147-0606, (801) 524-5493 or
Ms. Deborah M. Linke, Chief, Rates and Statistics Branch, Western
Area Power Administration, P.O. Box 3402, Golden, CO 80401-0098, (303)
275-1618 or
Mr. Joel 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: By Amendment No. 3 to Delegation Order No.
0204-108, published November 10, 1993 (58 FR 58716), 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; 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).
This action 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) were transferred
to and vested in the Secretary of Energy (Secretary) 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.
Rate Order No. WAPA-65, confirming, approving, and placing the
proposed formula for determining annual, power-related payments for the
Provo River Project into effect on an interim basis, is issued and will
be submitted promptly to FERC for confirmation and approval on a final
basis.
Issued in Washington, DC, February 16, 1995.
Bill White,
Deputy Secretary.
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DEPARTMENT OF ENERGY
Deputy Secretary
Order Confirming, Approving, and Placing into Effect on an Interim
Basis, a Formula for Determining Annual, Power-Related Payments for
the Provo River Project
February 16, 1995.
In the matter of: Western Area Power Administration Provo River
Project Power Rate, Rate Order No. WAPA-65.
The formula 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) were transferred
to and vested in the Secretary of Energy (Secretary) 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.
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 of DOE; 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 an definitions
apply:
Contractors: ICPA and UMPA.
CRSP: Colorado River Storage Project.
DCP: Deer Creek Powerplant.
DOE: Department of Energy.
DOE Order RA 6120.2: A Department of Energy order dealing with power
marketing administration financial reporting.
FERC: Federal Energy Regulatory Commission.
FRN: Federal Register notice.
FY: Fiscal year, beginning October 1.
ICPA: Intermountain Consumer Power Association.
Interior: U.S. Department of the Interior.
kW: Kilowatt.
kW/month: The greater of (1) the highest 30-minute demand measured
during the month, not to exceed the contract obligation, or (2) the
contract rate of delivery.
kWh: Kilowatthour.
M&I: Municipal and industrial.
mills/kWh: Mills per kilowatthour.
MWh: Megawatthour.
NEPA: National Environmental Policy Act of 1969.
OM&R: Operation, maintenance, and replacement.
PMA: Power marketing administration.
PRP: Provo River Project.
PRP-MP: Provo River Project--Marketing Plan.
PRS: Power repayment study.
PRWUA: Provo River Water Users Association.
Reclamation: Bureau of Reclamation, U.S. Department of the Interior.
SLCA: Salt Lake City Area.
SLCAO: Salt Lake City Area Office.
Treasury: U.S. Department of the Treasury.
UMPA: Utah Municipal Power Agency.
UP&L: Utah Power & Light Company.
Western: Western Area Power Administration, U.S. Department of Energy.
Effective Date
The revenue recovery formula will become effective on an interim
basis [[Page 11669]] beginning April 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 annual power-related
payments.
The following summarizes the steps Western took to ensure
involvement of interested parties in determining annual power-related
payments:
1. A Federal Register notice was published on July 12, 1994 (59 FR
35513), officially announcing the proposed formula, initiating the
public consultation and comment period, and presenting procedures for
public participation.
2. On July 15, 1994, a letter was mailed from Western's SLCAO to
customers and other interested parties announcing the publication of
the Federal Register notice of July 12, 1994.
3. The consultation and comment period ended August 11, 1994.
Project History
The PRP is located on the Provo River in central Utah. Deer Creek
Reservoir is backed-up behind Deer Creek Dam. Construction of the PRP
began in May 1938, with the powerplant completed in 1958. It has a
present generating capacity of 5 megawatts. The PRP initially was
designed to supply M&I and irrigation water to users in the Salt Lake
and Utah valleys. It does this by capturing the flow of the Provo River
and also by storing water diverted from the Duschesne and Weber Rivers.
UP&L has a powerplant on the Weber which has its production reduced
with the diversion of water to the Deer Creek Reservoir. As
compensation, the PRP furnishes UP&L energy to replace that which it is
estimated it would have generated absent the construction of the PRP.
This arrangement was formalized in contract No. Ilr-1082, dated
December 20, 1938.
The irrigation water consumers for the PRP are organized into the
PRWUA, a corporation of stockholders owning prorated Provo River water
entitlements. They executed contract No. Ilr-874 in 1936 with the
Federal Government to construct and repay irrigation-related project
facilities.
Only Deer Creek energy in excess of that obligated to UP&L has been
available for Federal marketing. Since 1963, CRSP has purchased the
available PRP energy at rates designed to recover the PRP's power-
related OM&R and investment costs. Since 1986, the PRP rate has also
included a commitment to supply $1.623 million toward the PRWUA's
repayment obligation for costs allocated to irrigation. The PRP's
original power-related investment was repaid in FY 1986.
Power Repayment Studies
PRSs are typically prepared each FY to determine if power revenues
will be sufficient to pay, within the prescribed time periods, all
costs assigned to be repaid by 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) 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, (3) each dollar of
assisted irrigation investment within the period established for the
irrigation water users to repay their share of construction costs.
The PRP PRSs have been used to determine the annual PRP rate, which
includes OM&R, wheeling and interest expenses. The contractors' annual
irrigation assistance payments to the PRWUA will not be included in the
PRS but will instead be paid under a separate agreement among
Reclamation, Western, PRWUA, and the contractors.
Certification of Rate
Western's Administrator has certified that the PRP formula for
determining annual, power-related payments placed into effect on an
interim basis herein will result in the lowest possible cost to
consumers, consistent with sound business principles. The formula has
been developed in accordance with administrative policies and
applicable laws.
Discussion
Each year, the contractors will pay the PRP's total estimated
annual power-related costs in return for the total marketable energy
produced at the PRP. The energy produced at the PRP has been allocated
to the contractors proportional to their PRP entitlement. Western will
prepare an annual PRS which will identify the anticipated power-related
costs for the next FY. Budgeted minor replacements and additions will
be included in the annual expenses. If replacements or additions
exceeding $5,000.00, but no greater than $25,000.00 are needed, the
contractors will be given the option of financing their share of the
cost, proportional to their PRP entitlement, in advance, or of having
the cost capitalized at DOE's current interest rate (the year in which
funds are first expended) and amortized over the estimated, average
life of the replacement, or 50 years, whichever is less. Additions will
be amortized over 50 years. Each contractor will pay its share of the
annual costs identified in the PRS in 12 equal monthly installments.
This method of determining annual power-related revenue
requirements will satisfy the cost-recovery criteria set forth in DOE
Order RA 6120.2.
Statement of Revenue and Related Expenses
The revenue requirements for the PRP are based upon PRS estimates
of future annual costs. Each FY's annual estimated costs will be
adjusted when historical financial data becomes available. The
following table provides a summary of estimated revenue and cost data
through the proposed 5-year approval period.
Provo River Project Total--5-Year Projections Revenues and Costs
[$1,000]
------------------------------------------------------------------------
Total FY
1995-99
projections
------------------------------------------------------------------------
Total Revenues....................................... 1,341
------------
Costs:
O&M...................................................... 959
Transmission............................................. 155
Interest................................................. 136
Investment Repayment..................................... 91
------------
Total Costs.......................................... 1,341
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Basis for Rate Methodology--Provo River Project
The contractors will be billed each FY, payable in 12 equal monthly
payments. The monthly payments will be due and payable regardless of
the amount of power the contractors receive from the PRP. During the
first year this procedure is in effect, the annual sum due for FY 1995
will be divided by the months remaining in FY 1995. The contractors
will be billed in equal monthly installments for the remaining months
in FY 1995. Beginning in FY 1996, the proposed 12 equal monthly
installments will take effect. Each FY, Western will project PRP
expenses by [[Page 11670]] preparing a PRS which will include budgeted
OM&R and repayment costs for the PRP. The revenue requirement shown in
this PRS will not be dependent upon the power and energy made available
for sale, or the rate of generation each year. The amount of each
monthly payment for the following FY shall be established in advance by
Western and submitted to each contractor on or before August 31 of the
year preceding the appropriate FY.
The preparation of each FYs PRS shall include adjustment to the
figures used in the previous year's PRS to incorporate final financial
and operational data for the prior FY. Any adjustments required,
whether resulting in an increase or decrease of the annual sum due,
will be added to the FY then being calculated, and divided over 12
equal monthly installments.
Minor replacements and additions will be included in annual OM&R
expenses. If replacements and/or additions exceeding $5,000.00, but no
greater than $25,000.00, in cost are needed, the contractors will be
given the option of financing the cost through their own non-Federal
sources or having the cost financed by the Federal Government and
amortized and paid over the lesser of the average life of the
replacement or 50 years, whichever is less. Additions will be amortized
over 50 years. If financed with Federal funds, the cost will be
capitalized at the then-current interest rate prescribed by DOE,
pursuant to RA 6120.2 11B, ``Basic Policy for Rate Adjustments;
Interest Rate Formula,'' in the FY in which funds are first expended
for the replacement or addition.
If replacements over $25,000.00 are needed, the contractors will
consult with Reclamation, the PRWUA, and Western about financing the
replacement.
The proposed formula constitutes a minor rate adjustment as defined
by the procedures for public participation in general rate adjustments
covered in 10 CFR 903.2(f). The PRP's annual sales are less than 100
million kWh and installed capacity is less than 20,000 kW.
Comments
During the 30-day comment period, Western received no written
comments either requesting information or commenting on the formula.
Comments were received in response to the revised, PRP-MP Federal
Register notice dated July 11, 1994 (59 FR 35334). Comments were
accepted on Western's revised PRP-MP proposal until August 10, 1994.
These comments were addressed in the PRP-MP Federal Register notice
dated November 21, 1994 (59 FR 60007).
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 the Office of Management and Budget is required.
Availability of Information
Information regarding this rate order, including PRSs, comments,
letters, memorandums, and other supporting material made or kept by
Western for the purpose of developing the revenue-recovery methodology,
is available for public review at the following offices:
Western Area Power Administration, Salt Lake City Area Office, Office
of the Assistant Area Manager for Power Marketing, 257 East 200 South,
Suite 475, Salt Lake City, UT 84111
Western Area Power Administration, Division of Marketing and Rates,
1627 Cole Boulevard, Golden, CO 80401
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 formula for determining annual, power-related payments 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 April 1, 1995, the method of cost recovery for the
Provo River Project. The procedure shall remain in effect on an interim
basis, pending Federal Energy Regulatory Commission confirmation and
approval of it or a substitute process on a final basis, through March
31, 2000.
Issued in Washington, DC, February 16, 1995.
Bill White,
Deputy Secretary.
[FR Doc. 95-4880 Filed 3-1-95; 8:45 am]
BILLING CODE 6450-01-P
