04-11413. Salt Lake City Area Integrated Projects

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of Determination of the Post-2004 Marketable Resources.

SUMMARY:

The Western Area Power Administration (Western), a Federal power marketing agency of the Department of Energy (DOE), announces its determination of the Post-2004 Marketable Resources (which consists of both capacity and energy) from the Salt Lake City Area Integrated Projects (SLCA/IP) developed under the requirements of Subpart C—Power Marketing Initiative of the Energy Planning and Management Program (Program) Final Rule. Western has evaluated hydrologic studies that indicate, most importantly, the need to reduce the energy component of the Marketable Resources for the 20 years of the contract period. In fiscal year (FY) 2005 (beginning October 1, 2004), the energy component of the Marketable Resources begins at its lowest level and then gradually increases over the next 5 years. It reaches a level in the fifth year that remains constant through the remainder of the contracting period, subject to change only under the terms of the contract. Firm electric service contracts (Contracts) between Western and its existing and new customers will permit delivery to begin with the October 2004 billing period and continue through the September 2024 billing period (Contract Period).

DATES:

The Determination of Marketable Resources will become effective June 21, 2004 and will be available for contracting October 1, 2004.

ADDRESSES:

All documents developed or retained by Western in developing its determination of Marketable Resources are available for inspection and copying at the Colorado River Storage Project Management Center, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111.

SUPPLEMENTARY INFORMATION:

Western published its Final Post-2004 Resource Pool Allocation Procedures (Procedures) in the Federal Register (64 FR 48825, September 8, 1999) to implement Subpart C—Power Marketing Initiative of the Program's Final Rule (10 CFR 905), published in the Federal Register (60 FR 54151, October 20, 1995). The Program, developed in part to implement section 114 of the Energy Policy Act of 1992, became effective November 20, 1995. The goal of the Program is to require planning and efficient electric energy use by Western's long-term firm power customers and to extend Western's firm power resource commitments.

Following publication of the Procedures, Western executed amendments to all Contracts with existing firm electric service customers. These amendments specified that each existing customer would be provided its proportional share of 93 percent of the Marketable Resources for the Contract Period. The amendments also provided that prior to October 1, 2004, Western would solely determine the quantities of Marketable Resources (both capacity and energy), which would be available for the Contract Period. Western is announcing its determination of this marketable capacity and energy with this notice.

The remaining 7 percent of the Marketable Resources available for the Contracting Period, not extended on a proportional share basis to Western's existing customers, was used in accordance with the Procedures to establish a project-specific power resource pool that allocated power to new eligible customers.

The deadline for applications from new eligible customers was June 8, 2000, and Western received 66 applications. Following evaluation, proposed allocations for new customers were published in the Federal Register (66 FR 31910, June 13, 2001), and final allocations were published in the Federal Register (67 FR 5113, February 4, 2002). Adjusted final allocations were published in the Federal Register (67 FR 49019, July 29, 2002) due to minor inconsistencies in the treatment of the allocations for three applicants.

To the extent this Notice of Determination of Marketable Resources establishes the quantities of marketable capacity and energy available to all SLCA/IP customers as of October 1, 2004, the determination will also impact the 7 percent of capacity and energy to be proportionally allocated to the new customers.

In making its Determination of Marketable Resources, Western has consulted with its existing and new customers in an extensive process through meetings and in presentations to individual customers and customer groups. Western solicited comments about the proposal by providing each existing and new customer with written draft proposals. After Western carefully considered the comments received, a final proposal was developed and provided to the new and existing customers prior to the publication of this Federal Register notice. Western has also consulted with the Bureau of Reclamation (Reclamation) in making this determination.

Determination of Marketable Resources

A. Marketable Energy

Western has made the determination to reduce the amount of SLCA/IP marketable energy that will be available beginning October 1, 2004. Western believes this decision minimizes the financial impacts of drought conditions and will sustain the financial health of the SLCA/IP.

The reason for lowering the amount of marketable energy is the significant reduction in forecasted electrical generation from the SLCA/IP during the 20-year contract period. Drought conditions in the Upper Colorado River Basin during the last 5 years have significantly lowered reservoir storage levels and reduced water releases through the SLCA/IP power plants. These dry conditions resulted in Western purchasing extraordinary quantities of energy to firm its contractual energy commitments. Western developed forecasts of SLCA/IP generation for the 20-year contract period based on projections of water releases through the SLCA/IP facilities. Because of the lowered reservoir levels, the near-term forecasts indicate the most severe reductions, and lower generation amounts are also forecasted for the entire 20-year contract period.

Western's determination of the marketable energy is calculated from Reclamation's hydrological projections. The table shows the SLCA/IP marketable energy available in each fiscal year. Beginning in FY 2005, the amount of marketable energy available will increase each year until the marketable energy level plateaus in FY 2009.

SLCA/IP Marketable Energy Levels

[Excludes Reclamation Project Use Reservations]

Fiscal year	Marketable annual energy (GWh)
FY 2005 (10/1/04-9/30/05)	4,557.5
FY 2006 (10/1/05-9/30/06)	4,655.3
FY 2007 (10/1/06-9/30/07)	4,753.1
FY 2008 (10/1/07-9/30/08)	4,851.0
FY 2009-FY 2024 (10/1/08-9/30/24)	4,948.8

Western will support these yearly energy levels with any necessary firming purchases and establishing an appropriate firm power rate. Any future changes, if necessary, in levels of marketable energy will be made following the contract notification provisions.

Western recognizes the reduction in the amount of marketable energy may pose hardships for some customers. Western believes the reduction in marketable resources can be improved from time to time by providing Available Hydro Power (AHP) under the contract. Should hydrologic projections periodically improve to the extent energy is available from the SLCA/IP power plants in excess of marketable energy, Western will make AHP energy available to its customers.

B. Marketable Capacity

Western has decided to maintain SLCA/IP marketable capacity at present levels for the entire Contract Period. As previously published in the Federal Register, existing customers will be extended 93 percent of their current capacity allocations. New customers will receive the capacity allocations as published in the July 29, 2002, Federal Register (67 FR 49019).

Effect on Power Allocations

As detailed above, the determination of Marketable Resources will result in a reduction of previously published energy allocations to both existing and new customers. The determination will not result in a reduction of previously published capacity allocations. Allocations for existing customers were published April 2, 1987 (52 FR 10620), and revised August 24, 1989 (54 FR 35234). Some allocations may now differ due to contractual changes that have occured since the original publication. Allocations for new customers were published on July 29, 2002 (67 FR 49019). The new, reduced energy levels will be distributed to all firm electric service customers on a proportional basis and will be reflected in a new, revised Exhibit A for each customer. Western will be submitting a new, revised Exhibit A to each customer after the effective date of this notice.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

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

Environmental Compliance

Western completed an “Energy Planning and Management Program Environmental Impact Statement” (EIS) on the Program in 1995, pursuant to the National Environmental Policy Act (NEPA) of 1969, 42 U.S.C. 4321, et seq.; the Council on Environmental Quality Regulations for implementing NEPA (40 CFR 1500-1508); and the DOE NEPA Implementing Procedures and Guidelines (10 CFR 1021). The Record of Decision was published in the Federal Register (60 FR 53181, October 12, 1995). Western's NEPA review assured all environmental effects related to these procedures had been analyzed. The application of the Program's Power Marketing Initiative to the SLCA/IP was specifically addressed in another EIS, the “Salt Lake City Area Integrated Projects Electric Power Marketing Final Environmental Impact Statement,” published in January 1996. The Record of Decision for this EIS was published in the Federal Register on November 1, 1996 (61 FR 56534). The Power Marketing Initiative was applied under the provisions of the approved Program, and public notice of the specific terms was published in the Federal Register on June 25, 1999 (64 FR 34414). Final allocations from the SLCA/IP resource pool were also published in the Federal Register (67 FR 49019, July 29, 2002). The two referenced EISs and associated Records of Decision provide adequate NEPA review for the determination of SLCA/IP marketable resources addressed in this notice.

Determination Under Executive Order 12866

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

Small Business Regulatory Enforcement Fairness Act

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

Dated: May 10, 2004.

Michael S. Hacskaylo,

Administrator.