05-11884. Pick-Sloan Missouri Basin Program-Eastern Division-Rate Order No. WAPA-126

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of proposed power rates.

SUMMARY:

The Western Area Power Administration (Western) is proposing revised rates for Pick-Sloan Missouri Basin Program—Eastern Division (P-SMBP—ED) firm electric and firm peaking power service. Current rates, under Rate Schedules P-SED-F7 and P-SED-FP7, extend through December 31, 2008. The proposed rates will provide sufficient revenue to pay all annual costs, including interest expense, and repayment of required investment within the allowable period. Western will prepare a brochure that provides detailed information on the rates to all interested parties. The proposed rates, under Rate Schedules P-SED-F8 and P-SED-FP8, are scheduled to go into effect on January 1, 2006, and will remain in effect through December 31, 2010. Publication of this Federal Register notice begins the formal process for the proposed rates.

DATES:

The consultation and comment period begins today and will end September 14, 2005. Western will present a detailed explanation of the proposed rates at public information forums. Public information forum dates are:

1. July 19, 2005, 10 a.m. MDT, Denver, CO.

2. July 20, 2005, 8 a.m. CDT, Lincoln, NE.

3. July 20, 2005, 2 p.m. CDT, Sioux Falls, SD.

4. July 21, 2005, 9 a.m. CDT, Fargo, ND.

Western will accept oral and written comments at public comment forums. Public comment forums will be held on the following dates:

1. August 16, 2005, 9 a.m. MDT, Denver, CO.

2. August 17, 2005, 9 a.m. CDT, Sioux Falls, SD.

Western will accept written comments any time during the consultation and comment period.

ADDRESSES:

Send written comments to Robert J. Harris, Regional Manager, Upper Great Plains Region, Western Area Power Administration, 2900 4th Avenue North, Billings, MT 59101-1266, e-mail [e-mail]. Western will post information about the rate process on its Web site at http://www.wapa.gov/​ugp/​rates/​2006FirmRateAdj. Western will post official comments received via letter and e-mail to its Web site after the close of the comment period. Western must receive written comments by the end of the consultation and comment period to ensure they are considered in Western's decision process.

Public information forum locations are:

1. Denver—Radisson Stapleton Plaza, 3333 Quebec Street, Denver, CO.

2. Lincoln—Peru State College Center, 1111 O Street, Lincoln, NE.

3. Sioux Falls—Sheraton Hotel and Convention Center, 1211 West Avenue North, Sioux Falls, SD.

4. Fargo—Doublewood Inn, 3333 13th Avenue South, Fargo, ND.

Public comment forum locations are:

1. Denver—Radisson Stapleton Plaza, 3333 Quebec Street, Denver, CO.

2. Sioux Falls—Sheraton Hotel and Convention Center, 1211 West Avenue North, Sioux Falls, SD.

FOR FURTHER INFORMATION CONTACT:

Mr. Jon R. Horst, Rates Manager, Upper Great Plains Region, Western Area Power Administration, 2900 4th Avenue North, Billings, MT 59101-1266, telephone [phone], e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

Proposed rates for P-SMBP—ED firm electric and firm peaking service are designed to recover an annual revenue requirement that includes investment repayment, interest, purchase power, operation and maintenance expense, and other expenses. The projected annual revenue requirement for firm electric service is allocated equally between capacity and energy.

The Deputy Secretary of Energy approved Rate Schedules P-SED-F7 and P-SED-FP7 for P-SMBP—ED firm electric and firm peaking service on December 24, 2003 (Rate Order No. WAPA-110, 69 FR 649, January 6, 2004), and the Federal Energy Regulatory Commission (Commission) confirmed and approved the rate schedules on December 23, 2004, under FERC Docket No. EF04-5031-000 (109 FERC 62,234). Approval for Rate Schedules P-SED-F7 and P-FED-FP7 covered 5 years beginning on February 1, 2004, ending on December 31, 2008.

Under Rate Schedule P-SED-F7, the second step of the composite rate effective on October 1, 2004, is 16.51 mills per kilowatthour (mills/kWh), the energy rate is 9.62 mills/kWh, and the capacity rate is $3.72 per kilowattmonth (kWmonth). Under Rate Schedule P-SED-F8, Western is proposing a two-step rate adjustment. Under a two-step method, the rates for P-SMBP—ED firm electric service will result in an overall composite rate increase of about 11.9 percent effective January 1, 2006, an additional 5.8 percent effective January 1, 2007, with a total compounded increase of about 18.4 percent. The proposed Firm Capacity and Firm Peaking Capacity rates will increase about 12.9 percent effective on January 1, 2006, an additional 6.0 percent effective January 1, 2007, with a total compounded increase of about 19.6 percent. Proposed rates for P-SMBP—ED firm electric and firm peaking service are listed in Table 1.

Table 1.—Two Step Proposal—Firm Electric Service Revenue Requirement and Rates

Firm electric service	Existing rates	First step rates Jan. 1, 2006	Percent change	Second step rates Jan. 1, 2007	Percent change
P-SMBP-ED Revenue Requirement	$160.1 million	$179.4 million	12.1	$189.9 million	5.9
P-SMBP-ED Composite Rate	16.51 mills/kWh	18.47 mills/kWh	11.9	19.54 mills/kWh	5.8
Firm Capacity	$3.72/kWmonth	$4.20/kWmonth	12.9	$4.45/kWmonth	6.0
Firm Energy	9.62 mills/kWh	10.69 mills/kWh	11.1	11.29 mills/kWh	5.6
Tiered 60 Percent Load Factor	5.21 mills/kWh	5.21 mills/kWh	0.0	5.21 mills/kWh	0.0
Firm Peaking Capacity	$3.72/kWmonth	$4.20/kWmonth	12.9	$4.45/kWmonth	6.0
Firm Peaking Energy1	9.62 mills/kWh	10.69 mills/kWh	11.1	11.29 mills/kWh	5.6
1 Firm Peaking Energy is normally returned. This rate will be assessed in the event Firm Peaking Energy is not returned.

During informal information discussions, Western received requests from the Firm Peaking customers and others to reconsider the Firm Peaking rate design. Concern was expressed by the Firm Peaking customers and others in informal discussions for this rate adjustment as well as in past rate processes on assignment of costs associated with the drought. Firm Peaking customers and others have suggested some alternatives for consideration by Western. In response to those suggestions, Western prepared an alternative proposal, the Firm Peaking Capacity Design Alternative, for consideration and comment in this public process.

Although the two-step rate adjustment in Table 1 is the option being proposed, maintaining equity among products and rates is in Western's interest. Therefore, Western is soliciting comments on equity among products and comments with supporting information for or against the Firm Peaking Capacity Design Alternative. In this alternative, the Firm Peaking Capacity rate is 13.9 percent less than the Firm Power Capacity rate. The impact on the Firm Power revenue requirement is approximately a 1-percent increase. The comparative changes in the rates between the proposed two-step rate adjustment and the Firm Peaking Capacity Design Alternative are described here: The Firm Capacity rate would increase from 12.9 percent to 16.1 percent in the first step and the second step would be an additional 6.0 percent in both proposals. The Firm Energy rate would remain the same with an 11.1-percent increase in the first step and a 5.6-percent increase in the second step. The proposed rates provided under this alternative are included in Table 2.

Table 2.—Proposed—Firm Peaking Capacity Design Alternative

Firm electric service	Existing rates	First step rates Jan. 1, 2006	Percent change	Second step rates Jan. 1, 2007	Percent change
P-SMBP—ED Revenue Requirement	$160.1 million	$179.4 million	12.1	$189.9 million	5.9
P-SMBP—ED Composite Rate	16.51 mills/kWh	18.71 mills/kWh	13.3	19.79 mills/kWh	5.8
Firm Capacity	$3.72/kWmonth	$4.32/kWmonth	16.1	$4.58/kWmonth	6.0
Firm Energy	9.62 mills/kWh	10.69 mills/kWh	11.1	11.29 mills/kWh	5.6
Tiered > Percent Load Factor	5.21 mills/kWh	5.21 mills/kWh	0.0	5.21 mills/kWh	0.0
Firm Peaking Capacity	$3.72/kWmonth	$3.72/kWmonth	0	$3.94/kWmonth	5.9
Firm Peaking Energy 1	9.62 mills/kWh	10.69 mills/kWh	11.1	11.29 mills/kWh	5.6
1 Firm Peaking Energy is normally returned. This rate will be assessed in the event Firm Peaking Energy is not returned.

Legal Authority

Since the proposed rates constitute a major rate adjustment as defined by 10 CFR part 903, Western will hold both public information forum and public comment forums. After review of public comments, and possible amendments or adjustments, Western will recommend the Deputy Secretary of Energy approve the proposed rates on an interim basis.

Western is establishing the firm electric service rates for P-SMBP—ED under the Department of Energy Organization Act (42 U.S.C. 7152); the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent laws, particularly section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)); and other acts that specifically apply to the projects involved.

By Delegation Order No. 00-037.00, effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates to Western's Administrator; (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary of Energy; and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove such rates to the Commission. Existing Department of Energy (DOE) procedures for public participation in power rate adjustments (10 CFR part 903) were published on September 18, 1985 (50 FR 37835).

Availability of Information

All brochures, studies, comments, letters, memorandums, or other documents that Western initiates or uses to develop the proposed rates are available for inspection and copying at the Upper Great Plains Regional Office, located at 2900 4th Avenue North, Billings, MT. Many of these documents and supporting information are also available on its Web site under the “2006 Firm Rate Adjustment” section located at http://www.wapa.gov/​ugp/​rates/​2006FirmRateAdj.

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 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

In compliance with the National Environmental Policy Act of 1969 (NEPA) (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 this action is categorically excluded from preparing an environmental assessment or an environmental impact statement.

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: June 8, 2005.

Michael S. Hacskaylo,

Administrator.