[Federal Register Volume 60, Number 55 (Wednesday, March 22, 1995)]
[Rules and Regulations]
[Pages 15040-15049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6979]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 11 and 381
[Docket No. RM93-7-000; Order No. 576]
Charges and Fees for Hydroelectric Projects
Issued: March 15, 1995.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
amending its regulations governing the assessment of annual charges for
the administration of Part I of the Federal Power Act, 16 U.S.C. 792-
823b. The final rule adopts a maximum charge and makes the assessments
commence at the same time as the commencement of project construction.
The final rule eliminates annual charges for minor licensees, and does
not (as originally proposed) adopt annual charges for existing
exemptees. The final rule eliminates filing fees for future exemption
applications, and adopts annual charges with respect to exemptions that
are issued in the future for projects that are equivalent in size to
those of major licensed projects. The final rule retains at this time
the separate allocation of annual charges for administrative costs for
municipal and non-municipal licensees, and retains as well the existing
formulae for allocating those costs between the two classes of major
licensees. The final rule defers consideration of those issues to a
future proceeding.
EFFECTIVE DATE: April 21, 1995.
FOR FURTHER INFORMATION CONTACT: Barry Smoler, Office of the General
Counsel, Federal Energy Regulatory Commission, 825 N. Capitol Street
NE., Washington, DC 20426, (202) 208-1269.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 3104, 941 North
Capitol Street, NE., Washington, DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397. To access CIPS, set your communications
software to 19200, 14400, 12000, 9600, 7200, 4800, 2400, 1200 or
300bps, full duplex, no parity, 8 data bits, and 1 stop bit. The full
text of this document will be available on CIPS for 60 days from the
date of issuance in ASCII and WordPerfect 5.1 format. After 60 days the
document will be archived, but still accessible. The complete text on
diskette in Wordperfect format may also be purchased from the
Commission's copy contractor, La Dorn Systems Corporation, located in
Room 3104, 941 North Capitol Street NE., Washington, DC 20426.
I. Introduction
The Federal Energy Regulatory Commission (Commission) is amending
its regulations governing the assessment of annual charges for the
administration of Part I of the Federal Power Act (FPA).\1\ The final
rule adopts a maximum charge and makes the assessments commence at the
same time as the commencement of project construction. The final rule
eliminates annual charges for minor licensees, and does not (as
originally proposed) adopt annual charges for existing exemptees.\2\
The final rule retains at this time the separate allocation of annual
charges for administrative costs for municipal and non-municipal
licensees, and retains as well the existing formulae for allocating
those costs between the two classes of major licensees. The final rule
defers consideration of those issues to a future proceeding.
\1\16 U.S.C. 792-823b.
\2\As discussed below, the final rule eliminates filing fees for
future exemption applications, and adopts annual charges with
respect to exemptions that are issued in the future for projects
that are equivalent in size to those of major licensed projects.
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II. Public Reporting Burden
Under the current regulations, major non-municipal licensees file
annual reports containing data on their electric generation during the
prior fiscal year. The final rule does not alter that reporting burden.
III. Background
On January 26, 1994, the Commission issued a Notice of Proposed
Rulemaking (NOPR) proposing to revise its regulations governing the
assessment of annual charges under FPA Part I.\3\ As explained in the
NOPR, the Commission is required by section 10(e)(1) of the FPA\4\ to
collect annual charges from licensees for the cost of administering
Part I of the FPA. Part 11 of the Commission's regulations\5\ provides
the manner in which licensees are charged for such costs. Prior to the
adoption of the current regulations in 1958 and 1963, administrative
charges were not based on the actual costs of the government, but were
in the nature of set fees that were billed for a calendar year.\6\
Under the current regulations, the reimbursable costs are determined on
a fiscal year basis.
\3\IV FERC Stats. & Regs. 32,505. The NOPR was published in
the Federal Register on February 3, 1994, 59 FR 5142.
\4\16 U.S.C. 803(e)(1).
\5\18 CFR part 11.
\6\The system of basing the annual charges on actual costs was
adopted in Order No. 205, 19 F.P.C. 907 (1958) (with respect to
municipal licensees only), and in Order No. 272, 30 F.P.C. 1333
(1963) (all other licensees); see also Order No. 272-A, 31 F.P.C.
1555 (1964).
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Section 3401 of the Omnibus Budget Reconciliation Act of 1986
(OBRA) \7\ requires the Commission to recover all of its costs for the
fiscal year through annual charges and fees.\8\ The annual charges
assessed pursuant to OBRA are based on an estimate of the Commission's
current-fiscal-year costs, with subsequent adjustments based on actual
costs.\9\ Pursuant to OBRA, the Commission collects annual charges to
recover the costs of administering Parts II and III of the FPA, as well
as the costs the Commission incurs in administering the Natural Gas
Act, the Natural Gas Policy Act, and the Interstate Commerce Act. In
this regard, we note that section 3401(a)(2) of OBRA provides that
``[t]he provisions of this subtitle shall not affect the authority,
requirements, exceptions, or limitations in sections 10(e) and 30(e) of
the Federal Power Act.''
\7\Pub. L. No. 99-509, Title III, Subtitle E, sec. 3401 (1986)
(codified at 42 U.S.C. 7178). OBRA is implemented in Part 382 of the
Commission's Regulations, 18 CFR Part 382.
\8\See Joint Explanatory Statement of the Committee of
Conference to Accompany H.R. 5300 (Conference Report), H.R. Rep. No.
1012, 99th Cong., 2d Sess. 238, reprinted in 1986 U.S.C.C.A.N. 3607,
3883.
\9\The former procedures for estimating the costs and later
adjusting the assessments were described in Order No. 472, 52 FR
18201 (May 14, 1987), FERC Stats. & Regs. (Regulations Preambles
1986-1990) 30,746 at pp. 30,612 and 30,616-17.
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In response to the NOPR, the Commission received 73 comments. The
[[Page 15041]] commenters are listed in Appendix A of this final rule.
The proposals in the NOPR, the comments thereon, and the Commission's
determinations thereon are discussed below on a subject by subject
basis.
IV. Discussion
As explained in the NOPR, former Sec. 11.1 of the Commission's
regulations provided three different allocation formulae for three
different classes of licensees. For non-municipal licensees of projects
of more than 2,000 horsepower of installed capacity, former
Sec. 11.1(a) set forth an allocation formula based on a combination of
the project's authorized installed capacity and the energy actually
generated. For municipal licensees of projects of more than 2,000
horsepower, former Sec. 11.1(b) set forth an allocation formula based
solely on capacity. For all licensees (both municipal and non-
municipal) of projects of 2,000 horsepower or less of installed
capacity, former Sec. 11.1(c) specified an annual charge of five cents
per horsepower, with a minimum charge of $5 per year.
The NOPR proposed two alternatives. In Alternative A, the
Commission proposed to base the allocation of all of the annual charges
among a single class of licensees and exemptees, including all major
and minor municipal and non-municipal licensees and all exemptees. The
allocation would be based solely on the respective capacity of each
hydropower project as measured in kilowatts. Under Alternative B, the
Commission proposed to retain separate categories and formulae for
major municipal and non-municipal licensees. Minor licensees and
exemptees would be classified with the comparable groups of major
licensees, and their charges would be assessed pursuant to the formulae
currently used for those groups.
A. Charges for Minor Licensees
As noted above, both Alternative A and Alternative B treated the
minor licensees in the same manner as the major licensees. In
Alternative A, all licensees were combined together in a single
allocation formula. In Alternative B, the minor licensees were included
in the respective allocation formulae for the major licensees. In other
words, the minor municipal licensees were included in the same
allocation formula with the major municipal licensees, and the minor
non-municipal licensees were included in the same allocation formula
with the major non-municipal licensees. The NOPR recognized that, under
either scheme, the charges for minor licensees may increase
substantially, but expressed the Commission's belief that the existing
charge of five cents per horsepower had been so heavily eroded by
inflation since it was adopted in 1963 as to have been rendered
comparatively meaningless.
The major licensees favor including the minor licensees in the same
assessment pool,\10\ while the minor licensees object. The major
licensees emphasize fairness in broadly spreading the Commission's
costs, while the minor licensees emphasize the burden on them.
\10\See, e.g., EEI at 16-17.
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Water Assn. contends that ``dramatic increases in fees'' would
cause some economically marginal minor licensees to abandon operation
of their projects.\11\
\11\Water Assn. at 3. See also North America.
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Some minor licensees contend that they cannot afford a minimum
annual charge of $100. Mackowiak, for instance, has a 37 kilowatt (kW)
project in his back yard, whose purpose is to provide electricity to
his home. He proposes that projects smaller than 100 kW in capacity be
excluded from the assessments.
We have decided not to assess annual charges on minor projects. As
a practical matter, excluding minor projects (i.e., projects of 1.5 MW
or smaller) will have no meaningful impact on the other licensees'
assessments, but will relieve minor licensees of a potentially onerous
burden.
In fiscal year 1993, a total of 1052 licensees were assessed a
total of $51,399,160 in annual charges for administration of Part I of
the FPA. Of that total, the 661 major licensees were assessed a total
of $51,350,699,\12\ while the 391 minor licensees were assessed a total
of $48,461.\13\ Thus, the major licensees accounted for 99.9 percent of
the total assessments, while the minor licensees accounted for only 0.1
percent of the total assessments.
\12\Of that total, 133 municipal major licensees were assessed a
total of $11,105,138, while 528 non-municipal major licensees were
assessed a total of $40,245,561.
\13\Of that total, 58 municipal minor licensees were assessed a
total of $3,404, while 333 non-municipal minor licensees were
assessed a total of $45,057.
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In other words, no major licensee derives any meaningful financial
benefit from including the minor licensees in the existing assessment
and allocation scheme. We believe that substantially increasing the
minor licensees' annual charges, as proposed in the NOPR, could impose
unreasonable burdens on many of those licensees, while exclusion of the
minor licensees from the new assessment and allocation scheme may
provide meaningful relief to many of those minor licensees.
Accordingly, we have defined the scope of the assessment process in new
Sec. 11.1(b)(1) so as to include only licensees whose projects exceed
1.5 MW in authorized installed capacity. The 1.5 MW is the equivalent
of the 2,000 horsepower definition of minor projects in former
Sec. 11.1.
B. Minimum and Maximum Charges
The NOPR proposed to establish a minimum and maximum annual charge.
The minimum annual charge would be $100. The maximum charge would set a
limit on annual charges so that, with respect to costs incurred by the
Commission, no licensee's project would be required to pay more than
2.0 percent of the total costs.\14\
\14\The proposed limit was modelled after the formula in
Sec. 382.203(b) with respect to annual charges for oil pipelines.
The maximum annual charge stated therein is 6.339 percent of the
total charges, but that figure is based on a much smaller number of
significant entities (interstate oil pipelines) sharing a much
smaller total cost.
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The NOPR also invited comment on other potential alternatives. With
respect to a minimum charge, other alternatives would be to waive
charges below a fixed dollar amount or below a fixed capacity. With
respect to a maximum charge, different percentages could be used for
the ceiling. If the formula were to be based solely on capacity,
another alternative would be to have a 50 percent discount for all
authorized capacity above a prescribed ceiling (e.g., 500 megawatts).
Many of the commenters express approval for a maximum charge, and
many of these comments come from licensees who would not themselves
benefit from such a cap. In general, the commenters believe that the
charges assessed to the largest projects are disproportionate.
Washington Company proposes a minimum base annual charge of
$500.\15\ Some smaller exemptees and minor licensees, on the other
hand, contend that the $100 minimum would be unduly burdensome on them.
\15\Washington Company at 5.
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Ogden opposes the two percent maximum charge on grounds that it
would solely benefit larger, non-municipal projects. Alaskan opposes
the maximum charge on grounds that, ``[i]f the charges are equitably
allocated at the outset, the effect of the proposed cap could be to
unfairly reallocate costs from larger to smaller projects.''\16\
Synergics also believes the cap is unfair.
\16\Alaskan at 5.
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Consolidated would lower the cap from 2 percent to 1.6 percent. Or,
using the alternative formula discussed in the [[Page 15042]] NOPR,
Consolidated would use a 75 percent discount factor for all capacity in
excess of 500 MW.\17\
\17\Consolidated at 11-12; see also Storage Council at 9-10;
Kvaerner at 10-11.
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Chelan argues that the proposed two percent cap is inequitable.
Chelan has two large projects each of which would fall beneath the cap,
while its downstream neighbor, Grant, has two comparable developments
that are grouped together into a single licensed project large enough
to benefit from the cap. Therefore, Chelan urges us to apply the cap to
licensees, not to projects. Chelan offers a further alternative: ``The
maximum charge per licensee could be 2 percent of the total
administrative costs, or .5 percent of the number of projects licensed
to it, whichever is greater.''\18\
\18\Chelan at 11-13.
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Grant suggests that the Commission conduct ``a reasonable project-
by-project sample study'' that would ``determine the average
relationship of administrative costs to project size,'' and thereafter
adjust the cap ``to reflect the outcome of the study.''\19\ Virginia
Electric proposes that the minimum charge be indexed to the rates of
inflation of the Commission's total costs.\20\
\19\Grant at 6.
\20\Virginia Power at 2.
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In light of our determination to assess annual charges only to
licensees whose projects have a capacity in excess of 1.5 MW, the
proposed minimum charge has been rendered moot. Accordingly, we have
not adopted it in the final rule.
Having considered the comments received, and for the reasons stated
in the NOPR, we will adopt the two percent maximum charge that was
proposed in the NOPR. We believe it is a reasonable compromise that
takes into account the financial capacity of the larger projects as
well as considerations of fairness in spreading the burden equitably
among licensees by putting finite limits on the extent of any one
project's burden.\21\
\21\We understand Chelan's point, but we believe that basing the
cap on licensees rather than on projects might result in as many
distortions as the one Chelan notes. No annual charge allocation
formula will ever be ``perfect'' or totally free of any distortion.
We believe that the one we have adopted is reasonable. In any event,
as noted below, our annual charge program is not predicated on
collecting from individual projects in proportion to their
responsibility for administrative costs incurred. For these and
other reasons, we also believe that no useful purpose would be
served by conducting the study suggested by Grant.
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C. Commencement of Assessments
The NOPR recognized that, in the case of major construction
projects, the license may be in effect for several years before project
construction is commenced and before the project commences operation
and goes into service. With respect to non-municipal licensees, annual
charges are payable each year from the date of issuance of the license,
but there is no incoming stream of revenue during those years, because
no power is being generated. Municipal licensees, on the other hand, do
obtain an exemption from annual charges prior to and during the
construction period. This is because Sec. 11.6(g) of the regulations
provides a complete exemption from certain annual charges when a
municipal project is under construction and not generating power, on
the theory that the project is operating without profit within the
meaning of the municipal exemption in FPA section 10(e).
Under the various regulatory regimes discussed in the NOPR, the
Commission would maintain the above-described exemption from annual
charges with respect to municipal projects that have not yet commenced
commercial operation. In addition, the NOPR proposed to include in the
assessment formula (whatever it may be) only licensed and exempted
projects that have already been constructed or whose construction has
commenced. Although framed in terms of all projects, as a practical
matter, because of the exemption for municipal projects, the change
would primarily affect non-municipal projects.\22\
\22\The NOPR expressed the Commission's belief that commencement
of construction is a more appropriate determinant than completion of
construction, for two reasons. First, of all, the date on which
construction commenced is a legally precise, documented date,
whereas the date on which construction is completed is not defined
with the same precision. This is because section 13 of the FPA
requires that the licensee commence construction of the project
within fixed time periods after issuance of the license, as
specified in section 13 and the license. Thus, the Commission has
evolved standards for determining the precise date of commencement
of construction, and the hydropower industry is familiar with those
standards. Secondly, the NOPR expressed the Commission's
understanding that licensees of projects under construction can draw
on construction loan funds to pay the annual charges, whereas such
funds may not be available prior to the commencement of
construction.
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Some commenters advocate commencement of annual charge assessments
upon issuance of the license or even earlier. Some prefer to delay
commencement of charges until the project commences operating. And some
prefer the middle ground proposed in the NOPR--commencement of charges
after commencement of construction.
EEI opposes deferring commencement of billing until commencement of
construction, contending that it would give a ``free ride'' to
licensees whose pre-construction planning activities consume Commission
staff time. EEI would, instead, assess the charges during the pre-
construction period but defer their payment until after construction,
has commenced. Otherwise, according to EEI, the existing licensees
would be ``subsidizing'' the new licensees; it would be unfair to the
existing licensees, who all paid annual charges from the inception of
their licenses.23
\23\EEI at 12-14. EEI goes on to advocate filing fees for
applications for a preliminary permit or an original license. Those
proposals go beyond the scope of the NOPR and will not be considered
here.
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Consolidated states that large pumped storage projects require
substantial lead time for design and financing prior to commencement of
construction, and that during this period pumped storage developers
typically have limited funds available.24 Consolidated also points
out that the existing regulations based annual charges for non-
municipal pumped storage projects entirely on capacity, so that such
projects did not receive the partial or complete relief accorded to
non-municipal conventional projects and municipal projects, both of
whose charges were based in part or in whole on generation; charges
based on generation do not commence until after construction, because
nothing is generated until the project has been built. Thus,
Consolidated favors the NOPR's commencement proposal as a more
equitable solution.25 Consolidated also asserts that pumped
storage projects, because of their large scale, bear a disproportionate
share of the annual charges. According to Consolidated, in 1993 pumped
storage projects comprised three percent of the total number of
licensed projects but paid 32 percent of the total annual charges for
administrative costs.26
\24\Consolidated at 3-4.
\25\Id. at 4-5.
\26\Id. at 6.
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Storage Council points out that pumped storage projects typically
require two to four years of lead time after licensing before
construction commences; that the annual charges for those projects are
quite large; and that private developers of these projects need to
concentrate their available finances on project design and power
marketing.27
\27\Storage Council at 4-5.
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Noah Corp. states that ``(t)he elimination of annual charges until
construction start * * * is the most important part of this rulemaking.
It will make more projects happen, because it [[Page 15043]] will
encourage development by reducing risk cost.''28
\28\Noah Corp. at 1.
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Adirondack argues that it is unfair for non-municipal licensees to
have to pay annual charges during the construction period when
municipal licensees do not. Adirondack favors commencing all annual
charges at the commencement of project operation, i.e., the day on
which the project first generates electricity.29
\29\Adirondack at 2.
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Storage Partners also advocates the date of commencement of
commercial operations as the appropriate date of commencement of annual
charges. Storage Partners would define the commencement of commercial
operations in terms of the contractually defined date of that type
specified in construction contracts, financing commitments, and power
sales contracts.30
\30\Storage Partners at 4.
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PG&E contends that the intent of Congress in FPA section 10(e) was
to require annual licensees to pay annual charges throughout the term
of the license, including the years immediately after its issuance,
even if construction hasn't commenced.31 PG&E points out that this
is a period of significant Commission staff involvement in the
licensee's activities, as the staff monitors and approves various
aspects of design and construction.32
\31\PG&E's comments, however, do not provide convincing
documentation of such Congressional intent.
\32\PG&E at 6-8.
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Consumers Power contends that the Commission can provide adequate
relief to project-financed projects by authorizing deferred payment of
annual charges on a case-by-case basis.33 Duke advocates a system
of direct billing for actual services rendered, starting with the
Commission's initial involvement with the applicant/licensee.34
\33\Consumers Power at 6.
\34\Duke at 2.
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In light of all of the comments, and for the reasons stated in the
NOPR, we believe that the annual charges commencement date proposed in
the NOPR strikes a reasonable balance and compromise among the
financial concerns of the different licensees. Licenses are issued for
terms of as long as 50 years, and the projects themselves are often
designed and constructed to last much longer than the license. Thus,
over time, providing a modest level of relief to licensees of projects
that haven't yet commenced construction imposes a very small burden on
the existing licensees, because the licensees of newly constructed
projects will be sharing the total annual charges burden long after the
expiration of the short pre-construction period. Moreover, if a few
years of pre-construction relief from annual charges enables one or
more licensees of new projects to bring their projects to fruition,
these new projects will help share the existing licensees' burden.
As we explained in the NOPR, we prefer to use the date of
commencement of construction as the benchmark for commencement of
annual charge assessments, as opposed to the date of commencement of
operation, because the former has come to be defined (for other
purposes) with considerably greater precision in the case law. It also
marks the point in time at which funding is available from construction
loans.
D. From Horsepower to Kilowatts
As discussed above and in the NOPR, former Sec. 11.1 provided
different allocation formulae for municipal and non-municipal projects
of more than 2,000 horsepower of installed capacity. Both formulae,
however, took into account a project's authorized installed capacity
defined in terms of horsepower.
In the NOPR, the Commission proposed to revise former Sec. 11.1 to
substitute kilowatts for horsepower in stating a project's authorized
installed capacity. This change was designed to reflect modern usage in
the rating of equipment used in hydropower projects. For the few
licensed hydromechanical projects, all of which are quite small, the
Commission would impute a kilowatt figure by multiplying these
projects' existing horsepower capacity by three-fourths.
All of the comments received on this proposal were in favor of it.
Accordingly, for the reasons discussed in the NOPR, this proposal has
been adopted in the final rule.
E. The Determination of Authorized Installed Capacity
The NOPR explained that questions have occasionally arisen as to
how to define ``authorized installed capacity.'' The Commission
proposed to clarify the concept of ``authorized installed capacity'' by
defining it in the proposed new Sec. 11.1(i). The authorized installed
capacity would be expressed in kilowatts, and would be the lesser of
the capacity of the generator or the turbine. Thus, if the capacity of
the generator exceeded the capacity of the turbine, then the capacity
of the turbine would apply, and vice-versa. The availability of stream
flow, however, would not be considered.35
\35\The NOPR stated that the proposed rule would codify the
policy articulated in Public Utility District No. 2 of Grant County,
Washington, 62 FERC 61,229 (1993).
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The capacity would be based on the actual power of the equipment in
question without regard to whatever ``nameplate'' rating might be
physically affixed to the unit (although, with respect to a new or
unmodified unit, the ``nameplate rating'' may well coincide with the
definition proposed herein). If the generator or turbine are
subsequently modified, such as by rewinding the generator, the capacity
would be recalculated accordingly.
This proposal drew a variety of comments. EEI, for instance,
proposes convening a technical conference to discuss the matter.36
\36\EEI at 16.
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Central Maine suggests that the Commission ``take into account
actual performance limitations such as age, wear, and cavitation limits
when determining authorized capacity.''37
\37\Central Maine at 4.
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Independent contends that turbine and generator nameplate ratings
may be less than accurate as a determinant of actual capacity.
Independent states that turbine ratings vary according to gate or head,
and that the total capacity of a multi-unit powerhouse may well be less
than the sum of the individual generator nameplate ratings because of
the hydraulics of a multi-unit site.38 Washington Company and
Westinghouse make the same points.39
\38\Independent at 2-3. See also National Hydro at 2.
\39\Washington Company at 7; Westinghouse at 2.
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Portland Co. would base the determination of capacity solely on the
manufacturer's nameplate rating, contending that this method ``is
simple, fair and predictable.'' Portland Co. claims that the formula
proposed in the NOPR is unreasonable because hydro turbines have ``a
unique gate position (water flow) vs. megawatt output efficiency
curve'' that has ``established upper and lower cavitation limits.'' Use
of the maximum head gate opening is unrealistic, because the turbine
runner might be damaged at that point on the curve. Portland Co. would
use, instead, ``the design upper cavitation limit as defined by the
turbine manufacturer at the rated head.''40
\40\Portland Co. at 3.
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PG&E advocates measuring capacity in kilovolt-amperes (kVA),
because manufacturers rate their generators' capacity in kVA.\41\
\41\PG&E at 5-6. We note that the portion of the definition in
Sec. 11.1(i) that deals with the capacity of generators is framed in
part in kVA. It is then converted to kilowatts for purposes of
comparison with the capacity of the turbine. [[Page 15044]]
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Westinghouse points out that profitability hinges in significant
measure on the price and other terms of a company's power sales
contracts, rather than on the raw capacity of the company's equipment.
Therefore, Westinghouse suggests utilizing financial data on operating
income and profitability in allocating annual charges. Westinghouse
would also adjust the annual charges to reflect the extent to which
poor management on the part of the regulated entity increases the level
of the Commission staff's regulatory activities with respect to that
entity.\42\
\42\Westinghouse at 3.
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The most efficient use of the water resource is at ``best gate''
rather than at ``maximum gate.'' Therefore, in response to the
comments, we have substituted ``best gate (maximum efficiency point)''
for ``maximum head gate'' in the turbine portion of the definition in
Sec. 11.1(i). We will not, however, adjust the total capacity of the
turbines at a multi-unit powerhouse to reflect the peculiar hydraulics
of the site. That is precisely the sort of potentially contentious
complexity we seek to avoid.
We will also clarify the NOPR's reference to the generator's
``nameplate'' rating. The rating on the generator's nameplate at
licensing will be deemed to be the capacity of the generator unless the
generator has been modified or rewound subsequent to licensing such
that the nameplate no longer accurately describes the generator's
actual capacity.
We are unwilling, however, to inject into the calculation such
subjective and extraneous factors as the efficiency of the licensee's
management or the profitability of the licensee's operation. Moreover,
our annual charge program is not predicated on collecting from
individual projects in proportion to their responsibility for
administrative costs incurred.
F. The Five Megawatt and Conduit Exemption Costs
As explained in the NOPR, section 30 of the FP\43\ provides that
the Commission may exempt from the FPA's licensing provisions any
facility (other than a dam, and within certain megawatt limits) which
is constructed or operated to generate electric power, if the facility
is located on non-federal land and ``utilizes for such generation only
the hydroelectric potential of a manmade conduit, which is operated for
the distribution of water for agricultural, municipal, or industrial
consumption and not primarily for the generation of electricity.''
\43\18 U.S.C. 823a.
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Sections 405 and 408 of the Public Utility Regulatory Policies Act
of 1978 (PURPA), as amended by section 408 of the Energy Security Act
of 1980,\44\ provide that the Commission may exempt from the FPA's
licensing requirements small hydroelectric power projects that are
located at the site of an existing dam (or utilize natural water
features without the need for a dam) and that have a proposed installed
capacity of five megawatts (MW) or less.
\44\16 U.S.C. 2705 and 2708.
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In the NOPR, the Commission expressed its belief that it has the
legal authority under OBRA to assess annual charges to exemptees,\45\
and proposed to do so with respect to both the 5 MW and the conduit
exemptions.\46\
\45\Section 3401(a) of OBRA provides as follows:
\46\Holders of 5 MW and conduit exemptions would, however, be
able to apply for exemption from annual charges based on their
municipal status.
(a) In General.--(1) Except as provided in paragraph (2) and
beginning in fiscal year 1987 and in each fiscal year thereafter,
the Federal Energy Regulatory Commission shall, using the provisions
of this subtitle and authority provided by other laws, assess and
collect fees and annual charges in any fiscal year in amounts equal
to all of the costs incurred by the Commission in that fiscal year.
(2) The provisions of this subtitle shall not affect the
authority, requirements, exceptions, or limitations in sections
10(e) and 30(e) of the Federal Power Act.
Whereas this provision makes clear that OBRA does not authorize
the collection of annual charges from, e.g., municipal licensees who
qualify for an exemption under the terms of section 10(e) of the
Federal Power Act, projects under exemptions from licensing are not
subject to section 10(e), and therefore charging them under OBRA
does not affect any provision of section 10(e).
Section 30(e) of the Federal Power Act requires the Commission
to collect from exemption applicants and certain license applicants,
on behalf of the U.S. Fish and Wildlife Service, the National Marine
Fisheries Service, and state fish and wildlife agencies, these
agencies' project-specific costs under section 30(c) (establishment
of mandatory conditions with respect to fish and wildlife
resources). These agencies are required to subtract from their
section 10(e) claims the money they recover under section 30(e). 5
MW and the conduit exemptions.
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Finally, pursuant to former Sec. 381.601, the Commission imposed a
filing fee for applications for a 5 MW exemption. As a part of its
proposal to assess annual charges on 5 MW exemptees, the NOPR proposed
to delete Sec. 381.601 from the regulations.\47\
\47\As noted in the NOPR, the Commission does not impose a
filing fee for applications for conduit exemptions.
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EEI supports the proposal in the NOPR for the same reasons that it
supports inclusion of minor licensees in the same pool with major
licensees.\48\
\48\EEI at 17.
Humboldt contends that OBRA does not confer any legal authority to
assess annual charges independent of the authority conferred by section
10(e) of the FPA, which (as the NOPR noted) applies to licensees. Thus,
Humboldt contends that the Commission lacks legal authority to assess
annual charges to exemptees.
Humboldt further contends that the assessment of annual charges
against exemptees violates the Congressional purpose and spirit of
PURPA, which was to encourage certain small power projects by freeing
them from regulatory requirements and costs.\49\
\49\Humboldt at 3-4. See also Westinghouse at 3-4.
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Howard contends that ``(l)umping exempted and licensed projects
into a single administrative framework defeats the spirit'' of PURPA,
``which put small projects with minimal environmental impacts in a
separate category to facilitate their development and
operation.''50
\50\Howard at 2.
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Water Assn. states that many of its exemptee members ``are facing
dramatic reductions'' in their revenues and ``are reevaluating the
continued operation'' of their projects. Water Assn. believes that the
imposition of annual charges ``could easily tip the balance against
continued operation.''51
\51\Water Assn. at 2.
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Ann Arbor states that it relied in part on the absence of charges
when it redeveloped its two small (900 kW and 540 kW) exempted
projects, and that the assessment of annual charges might contribute to
a decision to sell or decommission one or both projects.52 Desert
also states that it relied, in part, on freedom from annual charges
when it decided to invest in its two small exempted conduit projects;
the two projects are operated on a not-for-profit basis to reduce water
rates.53
\52\Ann Arbor at 1.
\53\Desert at 1-2. See also Michiana.
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Columbus states that its exempted project ``was conceived to
demonstrate the feasibility of a municipality operating a low head
generator in Central Ohio at a water supply reservoir.''54
\54\Columbus at 1.
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Falls Creek contends that, by virtue of its exemption, the level of
regulatory services it receives is lower than those received by
licensees.55
\55\Falls Creek at 2.
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Haemmig states that his 1.4 kW project ``only produces
approximately $20 per year revenue for us.'' Adkins' project is located
in a national forest and is used solely to supply electricity
[[Page 15045]] to his ranch, whose alternate source of power is a
diesel generator. Lassen states that his 30 kW conduit exemption
project has a small positive cash flow but a negative rate of return,
and that the $100 minimum charge proposed in the NOPR would constitute
three percent of his gross revenue.
The Commission is persuaded by the comments that it should not
extend the annual charges scheme to the existing exemptees. We believe
that the statutory scheme by which the exemptions were authorized was
designed to induce the development of small projects, and that many of
the existing exemptees reasonably relied on freedom from annual charges
when they invested in their projects. We also note that many of the
existing exemptees paid a substantial filing fee at the time they filed
their applications for exemption. For all of these reasons, we will not
extend the scope of the annual charges scheme to encompass existing
exemptees.
As discussed in the NOPR, the filing fee for exemption applications
generates very little revenue but is so substantial as to likely deter
applicants from filing new applications. No comments were received on
the proposal to eliminate that filing fee. For the reasons stated in
the NOPR, we will delete it from the regulations.
We will, however, include in the annual charges allocation scheme
all exemptees whose projects exceed 1.5 MW in authorized installed
capacity and whose exemptions are issued subsequent to the effective
date of this final rule. Most of those exemptees will not have paid the
application filing fee, and they will be on notice of the annual
charges obligation at the time they choose to accept the exemption and
invest in the exempted project. The exemption will be conditioned on
knowing, voluntary acceptance of the obligation to participate in the
annual charges scheme. We will exclude from the annual charges all
projects of 1.5 MW capacity or less for the same reasons, explained
above, that we excluded all such projects that are licensed instead of
exempted. As a transition matter, we will allow any future exemptees
who paid the application filing fee prior to the effective date of this
final rule to credit that fee against their annual charge assessments
to the full extent of the fee that was paid.
G. Other Revisions to Annual Charges
Former Sec. 11.1(d) stated that the minimum annual charge for
projects involving transmission lines was $5. The NOPR noted that the
Commission's current practice is to state that charge in the articles
of the individual licenses, as appropriate. Therefore, the NOPR
proposed to conform the text of former Sec. 11.1(d) (renumbered as
proposed new Sec. 11.1(e)) to that practice. No comments were received
on this proposal, and the change has been made.
Former Sec. 11.20 provided two separate deadlines for payment of
bills for annual charges: 30 days for headwater benefits bills and 45
days for other annual charges bills. The NOPR proposed to make all such
bills payable upon 30 days of their rendition.
Many commenters express strenuous objection to this proposed
change,56 and no commenter supports it. Some commenters discuss
their experience with the time elapsed during mail transmissions
between themselves and the Commission. They also discuss the time
elapsed during mail transmissions within corporate or governmental
entities; the added delays and complexities of licensees who are
structured as corporate affiliates; and the layers of authority whose
prior approval is needed before issuing checks for large sums of money.
They discuss these matters in the context of the five percent per month
penalty for late payment of the annual charges bill.57
\56\See, e.g., EEI at 17-18; Central Maine at 4; Consumers at 7-
8; PG&E at 9. PG&E favors extending the period to 60 days.
\57\See section 17(b) of the FPA, 18 U.S.C. 810(b).
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Without endorsing any particular reason advanced by the commenters,
the Commission is persuaded by their collective response that the
present 45-day period should be retained. Therefore, the Commission
will conform the divergent deadlines in Sec. 11.20 by making both of
them 45 days.
The NOPR proposed a new Sec. 11.20, which would provide for
licensees to file an appeal of the bill to the Commission's Chief
Financial Officer. All decisions of the Chief Financial Officer on
appeals would be subject to rehearing by the Commission pursuant to
Sec. 385.713. This would essentially codify the current informal
practice. The NOPR noted that most billing disputes involve
mathematical calculations that can be readily resolved by discussion
with the Commission's staff without the need for a formal request to
the Commission for rehearing. The bill would still have to be paid
within 45 days of its rendition in order to avoid the assessment of
penalty payments under Sec. 11.21, but if a timely appeal or request
for rehearing were filed the bill could be paid under protest and
subject to refund. This provision would codify the Commission's current
practice. No comments were received on these proposals. They will be
adopted, for the reasons stated in the NOPR.
Former Sec. 11.6(i) required that applications for exemptions from
payment of annual charges ``shall be prepared on forms prescribed by
the Commission * * *'' Inasmuch as the Commission does not currently
prescribe such forms, the NOPR announced the Commission's intention to
delete the reference to such forms. No comments were received on this,
and the reference has been deleted.
The NOPR also proposed to add a sentence at the end of Sec. 11.6(i)
to clarify that bills for annual charges can be paid under protest and
subject to refund in the event that an application for an exemption
from payment is pending when the bill becomes payable. The NOPR
explained that this provision would codify the Commission's current
practice. No comments were received on this proposal, and we have
adopted it, for the reasons stated in the NOPR.\58\
\58\Snohomish suggests that the Commission pay interest on
annual charges paid in protest that are later refunded when the
protest is upheld. Snohomish argues that this would be fair and
equitable in light of the penalties for late payment of the charges.
Snohomish also suggests an escrow arrangement. The short answer is
that the penalties are mandated by the FPA, but the Commission has
no statutory authority to pay interest.
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The Washington State Energy Office and the U.S. Forest Service note
that the NOPR did not propose new regulations to implement section
1701(a) of the Energy Policy Act of 1992.\59\ That legislation involves
recovery through annual charges of certain costs incurred by federal
and state fish and wildlife agencies and other natural and cultural
resource agencies in connection with studies they perform pursuant to
Part I of the FPA. They urge us to propose new regulations to implement
section 1701(a). Citing section 504(g) of the Federal Land Policy
Management Act, the Forest Service also argues that ``any land use fees
charged by the Commission for hydropower projects should be based on
the fair market value of these lands for hydropower purposes.''\60\
\59\Pub. L. 102-486, 106 Stat. 2776-3133 (Oct. 24, 1992).
\60\Forest Service comments at 1.
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None of these matters was addressed in the NOPR, and they fall
beyond the scope of this rulemaking proceeding. Accordingly, they will
not be discussed or resolved in this final rule.
H. Separate Classes of Licensees; Capacity or Generation
Many commenters expressed their views on the choice between
[[Page 15046]] Alternatives A and B in the NOPR, i.e., whether to
maintain separate pools of costs attributable to municipal and non-
municipal licensees or to combine them into a single common pool of
costs for allocation among all licensees regardless of class. The non-
municipal licensees prefer to establish a combined pool, while the
municipal licensees prefer to maintain separate pools. The NOPR also
considered what formula to use to allocate costs among the licensees.
Within Alternative A, the NOPR discussed several potential variations:
(1) Base the allocation formula entirely on authorized installed
capacity; (2) base the formula entirely on generation; or (3) base it
on a combination of capacity and generation. Within Alternative B, the
NOPR retained the existing formulae (as described above) whereby the
allocation of costs for municipal licensees is based entirely on
capacity while the allocation for non-municipal licensees is based on a
combination of both capacity and generation.
Many commenters addressed this issue. The comments diverged widely,
cutting across municipal and non-municipal lines. Some commenters
preferred capacity, some preferred generation, and some preferred a
combination.
The Commission has decided to defer consideration of these issues
to a future proceeding. Because the Commission has not reached any
decision on whether to revise these aspects of the current regulations,
and if so, how, the final rule retains the separate pools of costs for
municipal and non-municipal licensees, and retains the distinctions in
the present formulae with respect to use of capacity and generation in
the respective allocations.
I. Transition Arrangements
In the NOPR, the Commission proposed a three-year transition period
for phasing in the changes described in the ``Alternative A''
regulatory text.
Many commenters supported use of a transition period in the event
that the Commission adopted significant changes in the annual charges
formulae. One commenter opposed having a transition period.\61\ Several
commenters suggested extending the transition period to five years, or
even to ten years.\62\
\61\Noah Corp. (at 2) contends that the phased-in transition
provisions are unnecessary and would further complicate the changes.
\62\APPA at 17; No. Cal. Power at 4; Okla. Authority; Public
Pool at 8-9; Westinghouse at 4-5.
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As discussed above, the transition period in the NOPR was proposed
to alleviate the dislocations attributable to adoption of the
Alternative A formula. The proposed regulatory text for Alternative B
did not include a transition period. Our decision to defer
consideration of the allocation formulae renders the proposed
transition period moot, and it will not be adopted. Thus, the maximum
charge, the exclusion of minor licensees, and the commencement of
assessments only after commencement of construction will all become
effective immediately.\63\
\63\We are, however, adopting a minor transition provision with
respect to the change from horsepower to kilowatts, discussed above.
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V. Regulatory Flexibility Certification
The Regulatory Flexibility Act of 1980 (RFA)\64\ generally requires
a description and analysis of proposed regulations that will have a
significant economic impact on a substantial number of small
entities.\65\ In the NOPR, we certified that the proposed regulations
would not have a significant economic impact on a substantial number of
small entities.
\64\5 U.S.C. 601-612.
\65\Section 601(c) of the RFA defines a ``small entity'' as a
small business, a small not-for-profit enterprise, or a small
governmental jurisdiction. A ``small business'' is defined by
reference to section 3 of the Small Business Act as an enterprise
which is ``independently owned and operated and which is not
dominant in its field of operation.'' 15 U.S.C. 632(a).
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The U.S. Small Business Administration, in its comments, asserts
that there are approximately 900 licensees and exemptees whose projects
have a rated capacity of less than 80 megawatts, and that section
3(17)(A) of the FPA uses that standard to define a ``small power
production facility.''\66\ The Association of California Water Agencies
(Water Assn.) contends that ``[a]dditional FERC fees for hydroelectric
licenses will be a major impact on already strained local water agency
budgets, and will additionally compromise the ability of the water
agencies to meet their mandate of providing essential services of
adequate water at reasonable costs.''\67\ Therefore, the Small Business
Administration and the Water Assn. urge the Commission to perform a
regulatory flexibility analysis. Several other exemptees also raised
this issue.68
\66\We note that the regulations previously in effect, as
discussed above, treated as ``minor'' for annual charge purposes
only those projects whose capacity did not exceed 2,000 horsepower,
which equates to 1.5 megawatts, not 80 megawatts.
\67\Water Assn. at 3-4.
\68\Conn. Producers; Desert.
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As discussed above, the Commission received numerous comments from
exemptees and minor licensees urging us to provide a measure of relief
from the proposed new regulations. In response to these comments, the
Commission has decided not to impose annual charges on either licensees
or exemptees whose projects have a capacity of 1.5 MW or less. This
encompasses all of the minor licensees and all of the exemptees of
comparable size. We have also excluded all of the existing exemptees
regardless of size. Accordingly, pursuant to section 605(b) of the RFA,
the Commission hereby certifies that the final rule adopted herein will
not have a significant economic impact on a substantial number of small
entities.
VI. Environmental Statement
Issuance of this final rule does not constitute a major federal
action having a significant adverse impact on the quality of the human
environment under the Commission's regulations implementing the
National Environmental Policy Act.\69\ The final rule adopted herein is
procedural in nature and therefore falls within the categorical
exemptions provided in the Commission's regulations. Consequently,
neither an environmental impact statement nor an environmental
assessment is required.\70\
\69\See Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs. (Regulations Preambles 1986-1990) 30,783 (Dec. 10, 1987)
(codified at 18 CFR part 380).
\70\See 18 CFR 380.4(a)(1). Water Assn. (at 4) contends that we
should prepare an environmental impact statement because, in its
view, the proposed revision of the annual charges allocation will
result in some projects ceasing to operate, thereby increasing the
burning of fossil fuels, thereby increasing air pollution. Putting
aside the procedural nature of the regulatory revisions, Water
Assn.'s assertions are purely speculative, relying on a tenuous
series of causal connections and a minute percentage of total
hydroelectric generation. Moreover, as discussed above, in response
to the comments received we have significantly modified the proposal
to relieve the potential burden on all existing exemptees and all
minor licensees.
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VII. Information Collection Statement
The Office of Management and Budget's (OMB) regulations at 5 CFR
part 1320 require that OMB approve certain information and
recordkeeping requirements imposed by an agency. The information
collection requirements pertinent to the existing regulations that are
retained by this final rule are contained in FERC-583 ``Annual Kilowatt
Generating Report (Annual Charges)'' (1902-0136). The Commission's
Financial Services Division uses the data for determination of the
amount of annual charges to be assessed licensees for reimbursable
government administrative costs. The Commission will submit to the OMB
a notification that these collections of information have been
modified. [[Page 15047]]
Interested persons may obtain information on these reporting
requirements by contacting the Federal Energy Regulatory Commission,
941 North Capitol Street NE., Washington, DC 20426 (Attention: Michael
Miller, Information Services Division, (202) 208-1415). Comments on the
requirements of this rule can be sent to the Office of Information and
Regulatory Affairs of OMB (Attention: Desk Officer for Federal Energy
Regulatory Commission).
VIII. Effective Date
This final rule is effective April 21, 1995.
List of Subjects
18 CFR Part 11
Electric power, Reporting and recordkeeping requirements.
18 CFR Part 381
Electric power plants, Electric utilities, Natural gas, Reporting
and recordkeeping requirements.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission amends parts 11
and 381 of chapter I, title 18, Code of Federal Regulations, as set
forth below.
PART 11--ANNUAL CHARGES UNDER PART I OF THE FEDERAL POWER ACT
1. The authority citation for part 11 continues to read as follows:
Authority: 16 U.S.C. 791a-825r; 42 U.S.C. 7101-7352.
2. Section 11.1 is revised to read as follows:
Sec. 11.1 Costs of administration.
(a) Authority. Pursuant to section 10(e) of the Federal Power Act
and section 3401 of the Omnibus Budget Reconciliation Act of 1986, the
Commission will assess reasonable annual charges against licensees and
exemptees to reimburse the United States for the costs of
administration of the Commission's hydropower regulatory program.
(b) Scope. The annual charges under this section will be charged to
and allocated among:
(1) All licensees of projects of more than 1.5 megawatts of
installed capacity; and
(2) All holders of exemptions under either section 30 of the
Federal Power Act or sections 405 and 408 of the Public Utility
Regulatory Policies Act of 1978, as amended by section 408 of the
Energy Security Act of 1980, but only if the exemption was issued
subsequent to April 21, 1995 and is for a project of more than 1.5
megawatts of installed capacity.
(3) If the exemption for a project of more than 1.5 megawatts of
installed capacity was issued subsequent to April 21, 1995 but pursuant
to an application filed prior to that date, the exemptee may credit
against its annual charge any filing fee paid pursuant to Sec. 381.601
of this chapter, which was removed effective April 21, 1995, 18 CFR
381.601 (1994), until the total of all such credits equals the filing
fee that was paid.
(c) Licenses and exemptions other than State or municipal. For
licensees and exemptees, other than State or municipal:
(1) A determination shall be made for each fiscal year of the costs
of administration of Part I of the Federal Power Act chargeable to such
licensees or exemptees, from which shall be deducted any administrative
costs that are stated in the license or exemption or fixed by the
Commission in determining headwater benefit payments.
(2) For each fiscal year the costs of administration determined
under paragraph (c)(1) of this section will be assessed against such
licenses or exemptee in the proportion that the annual charge factor
for each such project bears to the total of the annual charge factors
under all such outstanding licenses and exemptions.
(3) The annual charge factor for each such project shall be found
as follows:
(i) For a conventional project the factor is its authorized
installed capacity plus 150 times its annual energy output in millions
of kilowatt-hours.
(ii) For a pure pumped storage project the factor is its authorized
installed capacity.
(iii) For a mixed conventional-pumped storage project the factor is
its authorized installed capacity plus 150 times its gross annual
energy output in millions of kilowatt-hours less 100 times the annual
energy used for pumped storage pumping in million of kilowatt-hours.
(iv) For purposes of determining their annual charges factor,
projects that are operated pursuant to an exemption will be deemed to
have an annual energy output of zero.
(4) To enable the Commission to determine such charges annually,
each licensee whose authorized installed capacity exceeds 1.5 megawatts
must file with the Commission, on or before November 1 of each year, a
statement under oath showing the gross amount of power generated (or
produced by nonelectrical equipment) and the amount of power used for
pumped storage pumping by the project during the preceding fiscal year,
expressed in kilowatt hours. If any licensee does not report the gross
energy output of its project within the time specified above, the
Commission's staff will estimate the energy output and this estimate
may be used in lieu of the filings required by this section made by
such licensee after November 1.
(5) For unconstructed projects, the assessments start on the date
of commencement of project construction. For constructed projects, the
assessments start on the effective date of the license or exemption,
except for any new capacity authorized therein. The assessments for new
authorized capacity start on the date of commencement of construction
of such new capacity. In the event that construction commences during a
fiscal year, the charges will be prorated based on the date on which
construction commenced.
(d) State and municipal licensees and exemptees. For State or
municipal licensees and exemptees:
(1) A determination shall be made for each fiscal year of the cost
of administration under Part I of the Federal Power Act chargeable to
such licensees and exemptees, from which shall be deducted any
administrative costs that are stated in the license or exemption or
that are fixed by the Commission in determining headwater benefit
payments.
(2) An exemption will be granted to a licensee or exemptee to the
extent, if any, to which it may be entitled under section 10(e) of the
Act provided the data is submitted as requested in paragraphs (d) (4)
and (5) of this section.
(3) For each fiscal year the total actual cost of administration as
determined under paragraph (d)(1) of this section will be assessed
against each such licensee or exemptee (except to the extent of the
exemptions granted pursuant to paragraph (d)(2) of this section) in the
proportion that the authorized installed capacity of each such project
bears to the total such capacity under all such outstanding licenses or
exemptions.
(4) To enable the Commission to compute on the bill for annual
charges the exemption to which State and municipal licensees and
exemptees are entitled because of the use of power by the licensee or
exemptee for State or municipal purposes, each such licensee or
exemptee must file with the Commission, on or before November 1 of each
year, a statement under oath showing the following information with
respect to the power generated by the project and the disposition
thereof during the preceding fiscal year, expressed in kilowatt-hours:
[[Page 15048]]
(i) Gross amount of power generated by the project.
(ii) Amount of power used for station purposes and lost in
transmission, etc.
(iii) Net amount of power available for sale or use by licensee or
exemptee, classified as follows:
(A) Used by licensee or exemptee.
(B) Sold by licensee or exemptee.
(5) When the power from a licensed or exempted project owned by a
State or municipality enters into its electric system, making it
impracticable to meet the requirements of this section with respect to
the disposition of project power, such licensee or exemptee may, in
lieu thereof, furnish similar information with respect to the
disposition of the available power of the entire electric system of the
licensee or exemptee.
(6) The assessments commence on the date of commencement of project
operation. In the event that project operation commences during a
fiscal year, the charges will be prorated based on the date on which
operation commenced.
(e) Transmission lines. For projects involving transmission lines
only, the administrative charge will be stated in the license.
(f) Maximum charge. No licensed or exempted project's annual charge
may exceed a maximum charge established each year by the Commission to
equal 2.0 percent of the adjusted Commission costs of administration of
the hydropower regulatory program. For every project with an annual
charge determined to be above the maximum charge, that project's annual
charge will be set at the maximum charge, and any amount above the
maximum charge will be reapportioned to the remaining projects. The
reapportionment will be computed using the method outlined in
paragraphs (c) and (d) of this section (but excluding any project whose
annual charge is already set at the maximum amount). This procedure
will be repeated until no project's annual charge exceeds the maximum
charge.
(g) Commission's costs. (1) With respect to costs incurred by the
Commission, the assessment of annual charges will be based on an
estimate of the costs of administration of Part I of the Federal Power
Act that will be incurred during the fiscal year in which the annual
charges are assessed. After the end of the fiscal year, the assessment
will be recalculated based on the costs of administration that were
actually incurred during that fiscal year; the actual costs will be
compared to the estimated costs; and the difference between the actual
and estimated costs will be carried over as an adjustment to the
assessment for the subsequent fiscal year.
(2) The issuance of bills based on the administrative costs
incurred by the Commission during the year in which the bill is issued
will commence in 1993. The annual charge for the administrative costs
that were incurred in fiscal year 1992 will be billed in 1994. At the
licensee's option, the charge may be paid in three equal annual
installments in fiscal years 1994, 1995, and 1996, plus any accrued
interest. If the licensee elects the three-year installment plan, the
Commission will accrue interest (at the most recent yield of two-year
Treasury securities) on the unpaid charges and add the accrued interest
to the installments billed in fiscal years 1995 and 1996.
(h) In making their annual reports to the Commission on their costs
in administering Part I of the Federal Power Act, the United States
Fish and Wildlife Service and the National Marine Fisheries Service are
to deduct any amounts that were deposited into their Treasury accounts
during that year as reimbursements for conducting studies and reviews
pursuant to section 30(e) of the Federal Power Act.
(i) Definition. As used in paragraph (c) of this section,
authorized installed capacity means the lesser of the ratings of the
generator or turbine units. The rating of a generator is the product of
the continuous-load capacity rating of the generator in kilovolt-
amperes (kVA) and the system power factor in kW/kVA. If the licensee or
exemptee does not know its power factor, a factor of 1.0 kW/kVA will be
used. The rating of a turbine is the product of the turbine's capacity
in horsepower (hp) at best gate (maximum efficiency point) opening
under the manufacturer's rated head times a conversion factor of 0.75
kW/hp. If the generator or turbine installed has a rating different
from that authorized in the license or exemption, or the installed
generator is rewound or otherwise modified to change its rating, or the
turbine is modified to change its rating, the licensee or exemptee must
apply to the Commission to amend its authorized installed capacity to
reflect the change.
(j) Transition. For a license having the capacity of the project
for annual charge purposes stated in horsepower, that capacity shall be
deemed to be the capacity stated in kilowatts elsewhere in the license,
including any amendments thereto.
3. In Sec. 11.6, the heading, the introductory text of paragraph
(a), and paragraph (i), are revised, and the cross-reference at the end
of the section is removed, to read as follows:
Sec. 11.6 Exemption of State and municipal licensees and exemptees.
(a) Bases for exemption. A State or municipal licensee or exemptee
may claim total or partial exemption from the assessment of annual
charges upon one or more of the following grounds:
* * * * *
(i) Application for exemption. Applications for exemption from
payment of annual charges shall be signed by an authorized executive
officer or chief accounting officer of the licensee or exemptee and
verified under oath. An original and three copies of such application
shall be filed with the Commission within the time allowed (by
Sec. 11.28) for the payment of the annual charges. If the licensee or
exemptee, within the time allowed for the payment of the annual
charges, files notice that it intends to file an application for
exemption, an additional period of 30 days is allowed within which to
complete and file the application for exemption. The filing of an
application for exemption does not by itself alleviate the requirement
to pay the annual charges, nor does it exonerate the licensee or
exemptee from the assessment of penalties under Sec. 11.21. If a bill
for annual charges becomes payable after an application for an
exemption has been filed and while the application is still pending for
decision, the bill may be paid under protest and subject to refund.
4. Section 11.20 is revised to read as follows:
Sec. 11.20 Time for payment.
Annual charges must be paid no later than 45 days after rendition
of a bill by the Commission. If the licensee or exemptee believes that
the bill is incorrect, no later than 45 days after its rendition the
licensee or exemptee may file an appeal of the bill with the Chief
Financial Officer. No later than 30 days after the date of issuance of
the Chief Financial Officer's decision on the appeal, the licensee or
exemptee may file a request for rehearing of that decision pursuant to
Sec. 385.713 of this chapter. In the event that a timely appeal to the
Chief Financial Officer or a timely request to the Commission for
rehearing is filed, the payment of the bill may be made under protest,
and subject to refund pending the outcome of the appeal or rehearing.
PART 381--FEES
5. The authority citation for Part 381 is revised to read as
follows:
Authority: 15 U.S.C. 717-717w; 16 U.S.C. 791-828c, 2601-2645; 31
U.S.C. 9701; 42 [[Page 15049]] U.S.C. 7101-7352; 49 U.S.C. 60502; 49
App. U.S.C. 1-85.
6. Section 381.601 is removed and subpart F is reserved.
Appendix A
(Note: This Appendix will not be published in the Code of
Federal Regulations.)
Commenters
Adirondack Hydro Development Corp. (Adirondack)
Adrian Haemmig (Haemmig)
Alabama Power Company (Alabama Power)
Alaskan Utilities (Alaskan)
Allegheny Power System (Allegheny)
American Public Power Association (APPA)
Association of California Water Agencies (Water Assn.)
Calaveras County Water District (Calaveras)
California Department of Water Resources (Cal. Water)
Calleguas Municipal Water District (Calleguas)
Central Maine Power (Central Maine)
City of Ann Arbor, Michigan (Ann Arbor)
City of Spokane, Washington (Spokane)
City of Tallahassee, Florida (Tallahassee)
Columbus Department of Public Utilities (Columbus)
Connecticut Small Power Producers Association (Conn. Producers)
Consolidated Pumped Storage, Inc. (Consolidated)
Consumers Power Company (Consumers Power)
Desert Water Agency (Desert)
Duke Power Company (Duke)
Eagle Mountain Energy (Eagle)
Edison Electric Institute (EEI)
Energy Storage Partners (Storage Partners)
Fairfax County Water Authority (Fairfax)
Falls Creek H.P.
Friant Power Authority (Friant)
Georgia Power Company (Georgia)
Great Bear Hydropower, Inc. (Bear)
Humboldt Bay Municipal Water District, Kaweah River Power Authority,
and Nevada Irrigation District (Humboldt)
Hydro Energy Storage Council (Storage Council)
Idaho Power Company (Idaho Power)
Independent Hydro Developers, Inc. (Independent)
James B. Adkins (Adkins)
James C. Katsekas (Katsekas)
John E. Howard (Howard)
Kvaerner Energy Development and Halecrest Company (Kvaerner)
Lassen Research (Lassen)
McCallum Enterprises Limited Partnership (McCallum)
Michiana Hydroelectric Company (Michiana)
Montecito Water District (Montecito)
National Hydro
Noah Corp.
North American Hydro, Inc. (North American)
Northern California Power Agency and the City of Santa Clara,
California (No. Cal. Power)
Ogden Environmental and Energy Services (Ogden)
Oklahoma Municipal Power Authority (Okl. Authority)
Otter Tail Power Company (Otter Tail)
Pacific Gas and Electric Company (PG&E)
Pennsylvania Power & Light Company (Pennsylvania Power)
Portland General Electric Company (Portland Co.)
Potlatch Corporation (Potlatch)
Power Authority of the State of New York (PASNY)
Public Generating Pool (Public Pool)
Public Utility District No. 1 of Chelan County, Washington (Chelan)
Public Utility District No. 1 of Douglas County, Washington
(Douglas)
Public Utility District No. 2 of Grant County, Washington (Grant)
Richard G. Mackowiak (Mackowiak)
Sabine River Authority of Texas and Sabine River Authority, State of
Louisiana (Sabine)
Sacramento Municipal Utility District (SMUD)
Seattle City Light (Seattle Light)
Snohomish County, Washington, Public Utility District No. 1
(Snohomish)
South Carolina Electric & Gas Company (Carolina Electric)
Summit Hydropower (Summit)
Susquehanna Power Company and Peco Energy Power Company
(Susquehanna)
Synergics Energy Development, Inc. (Synergics)
Tacoma Public Utilities (Tacoma)
U.S. Forest Service
U.S. Small Business Administration
Virginia Electric and Power Company (Virginia Electric)
Washington State Energy Office (Washington Office)
Washington Water Power Company (Washington Company)
Westinghouse Electric Company (Westinghouse)
Zoes J. Dimos (Dimos)
[FR Doc. 95-6979 Filed 3-21-95; 8:45 am]
BILLING CODE 6717-01-P
