E9-14683. Amistad and Falcon Projects Rate Order No. WAPA-143

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of Order Concerning a Power Rate Formula.

SUMMARY:

The Deputy Secretary of Energy confirmed and approved Rate Order No. WAPA-143 placing a power rate formula for the Amistad and Falcon Projects of the Western Area Power Administration (Western) into effect on an interim basis. The provisional power rate formula will be in effect on an interim basis until the Federal Energy Regulatory Commission (FERC) confirms, approves, and places it into effect on a final basis, or until the power rate formula is replaced by another power rate formula.

DATES:

The provisional rate formula will be placed into effect on an interim basis on June 8, 2009, and will be in effect until the FERC confirms, approves, and places the provisional rate formula into effect on a final basis through June 7, 2014, or until superseded.

FOR FURTHER INFORMATION CONTACT:

Mr. Bradley S. Warren, CRSP Manager, Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111-1580, [phone], e-mail [e-mail], or Ms. Carol Loftin, Rates Manager, Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111-1580, [phone], e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

The Amistad and Falcon Dams are features of international water storage projects located on the Rio Grande River between Texas and Mexico. Under the terms of Contract No. 7-07-50-P0890 (Contract) dated August 9, 1977, Western marketed the power from these dams to two electric cooperatives, South Texas Electric Cooperative, Inc. (STEC or Customer), and Medina Electric Cooperative (MEC). Under an October 19, 1995, amendment to the Contract, MEC notified Western that it had transferred its generation and transmission facilities to STEC and would be a distribution cooperative served by STEC and requested that MEC's interest in the Contract be assigned to STEC. Western approved the Contract amendment. The power rate formula of the Contract was approved by the Federal Power Commission (FPC), predecessor to FERC, in Docket No. E-9566 on August 12, 1977 (59 FPC 1653), for a 5-year period effective on the date of initial operation of the Amistad Power Plant, June 8, 1983.^[1]

According to article 9(a) of the Contract, Western calculates the annual installment to be paid by the Customer, for the power generated at the Amistad and Falcon power plants on or before August 31 of the year preceding the fiscal year to which it pertains, and codifies this amount in a revised Exhibit A to the Contract. Each annual installment pays the annual amortized portion of the United States' investment in the Amistad and Falcon hydroelectric facilities with interest, and the associated operation, maintenance, and administrative costs. This repayment schedule is not dependent upon the power and energy made available for sale or the rate of generation each year.

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, and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove such rates to FERC. Existing Department of Energy procedures for public participation in power rate adjustments (10 CFR 903) were published on September 18, 1985.

Under Delegation Order Nos. 00-037.00 and 00-001.00C, 10 CFR part 903, and 18 CFR part 300, I hereby confirm, approve, and place Rate Order No. WAPA-143 into effect on an interim basis. The rate formula will be promptly submitted to FERC for confirmation and approval on a final basis.

Dated: Jun 15, 2009.

Daniel B. Poneman,

Deputy Secretary.

Department Of Energy

Secretary

Rate Order No. WAPA-143.

In the Matter of: Western Area Power Administration Power Rate Formula Adjustment for the Amistad and Falcon Projects: Order Confirming, Approving, and Placing the Power Rate Formula for Amistad and Falcon Projects Into Effect on an Interim Basis

This renewal of this power rate formula for the Amistad and Falcon Projects of the Western Area Power Administration (Western) was established in accordance with section 302 of the Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This Act transferred to and vested in the Secretary of Energy the power marketing functions of the Secretary of the Department of the Interior and the Bureau of Reclamation (Reclamation) under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent laws, particularly section 9(c) of the Reclamation Act of 1939 (43 U.S.C. 485h(c)), and other acts that specifically apply to the project 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 Federal Energy Regulatory Commission (FERC). Existing DOE procedures for public participation in power rate adjustments (10 CFR part 903) were published on September 18, 1985.

Acronyms and Definitions

As used in this Rate Order, the following acronyms and definitions apply:

Contract: Contract No. 7-07-50-P0890 dated August 9, 1977, and amended on October 19, 2005, between Western and South Texas Electric Cooperative.

Customer: South Texas Electric Cooperative, Inc.

DOE: Department of Energy.

DOE Order RA 6120.2: An order outlining power marketing administration financial reporting and ratemaking procedures.

FERC: Federal Energy Regulatory Commission.

FPC: Federal Power Commission—Predecessor to FERC.

FY: Fiscal year is the period from October 1 to September 30.

MEC: Medina Electric Cooperative.

NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, et seq.).

O&M: Operation and maintenance.

PRS: Power repayment study.

Reclamation: United States Department of Interior, Bureau of Reclamation.

Secretary: Secretary of Energy.

STEC: South Texas Electric Cooperative, Inc.

U.S. Section: United States Section of the International Boundary and Water Commission.

Western: United States Department of Energy, Western Area Power Administration.

Effective Date

The power rate formula will take effect June 8, 2009, and will remain in effect until June 7, 2014, pending approval by FERC on a final basis.

Public Notice and Comment

Subsection 903.23(a) of 10 CFR 903 does not require either a consultation and comment period, or public information or comment forums for rate extensions. Western considers this rate order a rate extension since the power rate formula is not changing; rather it is going through the course of a 5-year renewal. Western's sole customer under this rate extension, South Texas Electric Cooperative, Inc. (Customer or STEC), expressed its desire to continue using the power rate formula through an e-mail dated December 8, 2008. In addition, on April 2, 2009, Western met with the Customer in Nursery, Texas, where Western notified it of Western's intent to continue the power rate formula. Western also discussed the number of years covered in the annual installments, operation and maintenance funding, answered questions, and received comments and suggestions. The Customer expressed support for a renewal of the power rate formula.

Project Description

The Amistad and Falcon Dams are features of international water storage projects located on the Rio Grande River between Texas and Mexico. Western markets the power from these dams under the terms of Contract No. 7-07-50-P0890 (Contract), dated August 9, 1977.

On August 12, 1977, in Docket No. E-9566, the Federal Power Commission (FPC) approved for a 5-year period the power rate formula contained in the Contract between Reclamation, and two electric cooperatives, STEC and Medina Electric Cooperative (MEC), to become effective on the date of initial operation of Amistad Power Plant (59 FPC 1653). The effective date of the FPC order was June 8, 1983. STEC and MEC agreed to purchase all of the output of the Amistad and Falcon Power Plants and to pay the United States an annual installment as discussed in the Contract for a 50-year period, beginning when electric service initially became available from Amistad.

On October 1, 1977, the power marketing functions of Reclamation were transferred to Western and Western became responsible for the administration of the Contract. Western, STEC and MEC executed Supplement No. 1 to the Contract on April 10, 1986, to clarify the method for determining the annual installment consistent with DOE Order No. RA 6120.2. Those clarifications address repayment of Falcon hydroelectric facilities within the remaining period, establish interest during construction at seven (7) percent, discuss capitalization of major replacements and additions at current interest rates, and specify the actual date of initial service as June 8, 1983.

Under an October 19, 1995, amendment to the Contract, MEC notified Western that it had transferred its generation and transmission facilities to STEC and would be a distribution cooperative served by STEC and requested that MEC's interest in the Contract be assigned to STEC. Western approved the Contract amendment.

Supplement No. 1 required the amount of each annual installment be established in advance by the contracting officer in consultation with the U.S. Section and submitted to STEC as Exhibit A on or before August 31 of the year preceding the appropriate FY in accordance with the following:

The amount of each annual installment shall be the sum of:

(1) An annual repayment installment including interest, to amortize within the remaining period, the unpaid United States investment in the Falcon hydroelectric facilities and in the penstocks at Amistad Dam; plus

(2) An annual installment to amortize over a 50-year period, the United States actual total investment costs with interest, for hydroelectric power facilities, not including penstocks, at Amistad Dam to be under the jurisdiction of the U.S. Section, including the costs of engineering plans, supervision, administration of construction, and interest during construction * * * and

(3) The annual operation, maintenance, replacement, and administration costs of the U.S. Section and the administration costs of Western related directly or indirectly to the United States power facilities at Amistad Dam and at Falcon Dam, provided that such costs shall be based on prudent and businesslike management practices and in accordance with established electric industry operation and maintenance practices * * *

The billing procedures contained in Supplement No. 1 require Western to submit an invoice to the Customer for each monthly payment toward the annual installment on or before the tenth day of the month for which such payment is due. Payments are due and payable by the Customer on the first day of the following month. Western divides the calculated annual installment by twelve and bills the Customer monthly for this amount.

As detailed above, the rate formula of the Contract was approved by the FPC, for a 5-year period beginning June 8, 1983, and subsequent 5-year renewals of the power rate formula have been approved by FERC through June 7, 2009.^[1] Consequently, FERC's approval is now sought for an additional 5-year period. The effective dates are scheduled to be June 8, 2009, through June 7, 2014.

Power Repayment Studies

The Contract requires that Western calculate the annual installment to be paid by the Customer for the power generated at the Amistad and Falcon Power Plants, in consultation with the United States Section of the International Boundary and Water Commission (U.S. Section), and submit it to the Customer in the form of a contract exhibit on or before August 31 of the year preceding the FY to which it pertains.

Western calculates the annual installment based on 2 years of data. The calculation includes the projected costs of the rate installment year (future FY) and an adjustment from the last historic FY. The adjustment is the surplus or deficit that occurs in the last historic FY when actual costs and repayment obligations are subtracted from actual revenues. This surplus or deficit is combined with the projected rate installment year costs to arrive at the rate installment.

Statement of Revenue and Related Expenses

The following table provides a summary of revenues and expenses for the current power rate formula and the actual revenues and expenses for the same period.

Amistad/Falcon Comparison of 6-Year Revenues and Expenses FY 2004-2009

($000)

Item	Projected from FY 2004 PRS	1 Actual from FY 2008 PRS	Difference
Total Revenues	28,825	29,702	877
Revenues Distribution:
O&M	14,479	14,273	(206)
Interest	11,629	11,743	114
Repayment	2,717	2,775	58
(Deficit)/Surplus		911	911
Total Revenue Distribution	28,825	29,702	877
1 Although this rate process seeks approval for a 5-year period (FY 2009-2014), 6 years of data are shown in the above table due to FY 2009 data being an estimate, and is used for the current 2009 rate installment.

The following table provides a summary of the projected revenues and expenses during the provisional power rate formula period.

Amistad/Falcon 6-Year Projections¹ Revenues and Expenses

($000)

	FY 2009-2014
Total Revenues	28,789
Revenue Distribution:
O&M	14,080
Interest	11,035
Investment Repayment	3,674
Total	28,789
1 Although this rate process seeks approval for a 5-year period (FY 2009-2014), 6 years of data are shown in the above table due to FY 2009 data being an estimate, and is used for the current 2009 rate installment.

Availability of Information

Information regarding this power rate formula renewal, including a PRS, letters, e-mail, and other supporting material made or kept by Western and used to develop the power rate formula, is available for public review at the Colorado River Storage Project Management Center, Western Area Power Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, UT 84111. Some of these documents are available at http://www.wapa.gov/​crsp/​ratescrsp/​adjustments.htm under CRSP Rate Adjustment documents for the Amistad and Falcon Projects section.

Ratemaking Procedure Requirements

Environmental Compliance

In compliance with the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321, et seq.); Council on Environmental Quality Regulations (40 CFR parts 1500-1508); and DOE NEPA Regulations (10 CFR part 1021), Western has determined that this action is categorically excluded from the preparation of an environmental assessment or 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.

Submission to Federal Energy Regulatory Commission

The interim rate formula renewal herein confirmed, approved, and placed into effect on an interim basis, together with supporting documents, will be submitted to FERC for confirmation and approval on a final basis.

Order

In view of the foregoing and under the authority delegated to me, I confirm and approve and place into effect on an interim basis a renewal of the rate formula, effective June 8, 2009. The rate formula shall remain in effect on an interim basis, pending FERC's confirmation and approval of this or a substitute rate formula on a final basis through June 7, 2014.

Dated: June 15, 2009.

Daniel B. Poneman.

Deputy Secretary.

Footnotes

1.  A 5-year rate renewal of this same rate formula through June 7, 1993, was approved by FERC on July 20, 1988, at 44 FERC ¶ 62,058. Subsequent 5-year renewals of the rate formula have been approved by FERC. The most recent approval was on January 31, 2005, in Docket No. EF04-5101-000, which approved the same rate formula through June 7, 2009 (110 FERC ¶ 62,083).

1. A 5-year rate renewal of this same rate formula through June 7, 1993, was approved by FERC on July 20, 1988, at 44 FERC § 62,058. Subsequent 5-year renewals of the rate formula have been approved by FERC. The most recent approval was on January 31, 2005, in Docket No. EF04-5101-000, which approved the same rate formula through June 7, 2009 (110 FERC 62,083).