99-16017. Application of the Energy Planning and Management Program Power Marketing Initiative to the Salt Lake City Area Integrated Projects  

  • [Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
    [Notices]
    [Pages 34414-34417]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-16017]
    
    
    
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    _______________________________________________________________________
    
    Part III
    
    
    
    
    
    Department of Energy
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    Western Area Power Administration
    
    
    
    _______________________________________________________________________
    
    
    
    Application of the Energy Planning and Management Program Power 
    Marketing Initiative to the Salt Lake Area Integrated Projects; Notice
    
    
    
    2004 Power Market Plan; Notice
    
    
    
    Power Allocation Issues; Notice
    
    Federal Register / Vol. 64, No. 122 / Friday, June 25, 1999 / 
    Notices
    
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    DEPARTMENT OF ENERGY
    
    Western Area Power Administration
    
    
    Application of the Energy Planning and Management Program Power 
    Marketing Initiative to the Salt Lake City Area Integrated Projects
    
    AGENCY: Western Area Power Administration, DOE.
    
    ACTION: Notice of decision.
    
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    SUMMARY: The Western Area Power Administration (Western) is applying 
    the Energy Planning and Management Program (EPAMP) Power Marketing 
    Initiative (PMI) to the Salt Lake City Area Integrated Projects (SLCA/
    IP), as modified and discussed herein. For most of the current 
    customers, Western will extend 93 percent of the customer's pro rata 
    share of the SLCA/IP power resource available on October 1, 2004. 
    Effective on that same date, Western will make allocations of SLCA/IP 
    power to eligible new customers. Application procedures for new 
    customers will be set forth in a separate Federal Register notice in 
    the near future.
    
    FOR FURTHER INFORMATION CONTACT: Mr. Dave Sabo, CRSP Manager, Western 
    Area Power Administration, PO Box 11606, Salt Lake City, UT 84147-0606, 
    telephone (801) 524-6372, email sabo@wapa.gov.
    
    DATES: Western's decision to apply the PMI, as modified herein, to the 
    SLCA/IP will become effective on July 26, 1999.
    
    SUPPLEMENTARY INFORMATION:
    
    Authorities
    
        This decision about the future marketing of the SLCA/IP power 
    resources was made pursuant to the Department of Energy (DOE) 
    Organization Act (42 U.S.C. 7101-7352); and the Reclamation Act of 1902 
    (ch. 1093, 32 Stat. 388), as amended and supplemented by subsequent 
    enactments, particularly section 9(c) of the Reclamation Project Act of 
    1939 (43 U.S.C. 485h(c)); and other acts specifically applicable to the 
    projects involved.
    
    Background
    
        Western published its proposal to apply the EPAMP PMI to the SLCA/
    IP on February 26, 1997 (62 FR 8709-8710). Western proposed to extend 
    96 percent of the SLCA/IP firm Federal resources available on October 
    1, 2004, to its current firm-power customers for 20 years. The 
    remaining 4 percent of resources was proposed to be made available for 
    new customers. Further resource reductions of 1-percent each were 
    proposed to be made available to new customers on October 1, 2009, and 
    October 1, 2014.
        In its February 26, 1997, notice, Western requested comments on its 
    proposal. Interested parties were given until May 27, 1997, to comment 
    in writing. In addition, public information and comment meetings were 
    held in Sandy, Utah; Golden, Colorado; Albuquerque, New Mexico; and 
    Phoenix, Arizona. Comments were received from firm-power customers, 
    Native American tribes, environmental organizations, and members of 
    Congress.
        In a separate public process that started on December 1, 1998, at 
    63 FR 66166, Western published a Notice of Inquiry to explore the 
    impact of electric utility industry restructuring on Western's power 
    allocation policies. A forum was held in Denver, Colorado, on January 
    6, 1999, to receive public comment on this matter, and written comments 
    were accepted from the public until the end of a 45-day consultation 
    and comment period. The comments received during this process are being 
    addressed in a separate Federal Register notice published concurrently 
    with this notice.
        Several of the comments Western received on the Notice of Inquiry 
    concerned the size of the proposed new customer power pool, 
    particularly the adequacy of the pool to meet the needs of Native 
    American tribes. Consequently, on January 29, 1999, at 64 FR 4646, 
    Western published a notice of an additional opportunity to comment on 
    the appropriate size of the new customer power pool and to consider the 
    needs of eligible Native American tribes. Western accepted comments on 
    this topic until March 1, 1999. Informational meetings were held on the 
    SLCA/IP resources in Phoenix, Arizona, and Albuquerque, New Mexico, to 
    better explain to potential new customers the opportunities available 
    to them under the proposal. Several comments were received from Native 
    American tribes, Native American organizations, and current Western 
    customers.
    
    Availability of Information
    
        All documents made or kept by Western for the purpose of developing 
    this decision are available for public review, inspection, and copying 
    at the CRSP Customer Service Center, at 257 East 200 South, Suite 475, 
    Salt Lake City, Utah.
    
    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 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. Western has 
    determined that 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.
    
    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.
    
    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), considerable environmental documentation has been prepared 
    addressing EPAMP, and the marketing of SLCA/IP power. Western completed 
    an environmental impact statement (EIS) on EPAMP. The Record of 
    Decision was published in the Federal Register (60 FR 53181, October 
    12, 1995). Western also completed the SLCA/IP Electric Power Marketing 
    EIS, and the Record of Decision was published in the Federal Register 
    (61 FR 56534, November 1, 1996). In the Marketing EIS, Western stated 
    that when EPAMP was applied to the SLCA/IP that if further 
    environmental review was required it would be completed at that time. 
    Since then, Western has determined that this action is categorically 
    excluded from preparation of an additional environmental assessment or 
    EIS. Accordingly, no further environmental review will be conducted.
    
    Major Comments and Western's Responses
    
        Western has considered the comments presented by all parties on the 
    proposal. The major comments received and Western's responses to those 
    comments are summarized below.
    
    1. The Extension of Existing Commitments to Current Customers
    
        Existing firm-power customers and Native American tribes were 
    generally supportive of Western's proposal. Many customers pointed out 
    that EPAMP had two components: a requirement that Western's firm-power 
    customers must
    
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    prepare integrated resource plans (IRP), and that Western extend a 
    major percentage of the existing Federal resources to Western's 
    existing firm-power customers through the PMI, with the exact amount to 
    be determined on a project-specific basis. The customers stated they 
    have complied with the IRP requirement and believe that Western is now 
    obliged to extend resource commitments. The customers further argued 
    that in order to prepare meaningful IRPs, they reasonably had to assume 
    that a stable Federal resource would continue to be available to them 
    since an uncertain Federal resource would make it very difficult to 
    determine future resource needs.
        Several customers also suggested that Federal power has become more 
    expensive in recent years; and, if the trend continued, Federal power 
    would soon become a noncompetitive resource. They commented that 
    revenues from the sale of power also repay up to 90 percent of the 
    Federal Government's investment in the irrigation features of the SLCA/
    IP water development projects. These customers argued that Western 
    should offer contract extensions while customers are willing to enter 
    into longer term arrangements, thus assuring the Federal Government of 
    a stable revenue stream to repay its investment in power and irrigation 
    facilities. Further argument was made that the electric industry is 
    undergoing many changes and that an extension of resources would help 
    stabilize volatile resource markets.
        Other arguments were made that this is not an appropriate time to 
    extend resource commitments. According to these other commentors, 
    changes in the electrical industry create uncertainties about who 
    should be Western's future customers and that Western should wait until 
    it has better knowledge of the marketplace. Concern was also expressed 
    that the extension would impede the progress of legislation to 
    privatize power marketing administration assets.
    Western's Response
        After consideration of the comments received and in light of the 
    broad discretion Congress has provided Western to implement policy 
    changes when warranted, Western has decided to modify its proposal. For 
    most of the current customers, Western will extend 93 percent of the 
    customer's pro rata share of the SLCA/IP power resource available on 
    October 1, 2004. No further reductions will be made in subsequent years 
    to meet the needs of new customers. Western will amend current 
    contracts to extend the term for 20 years effective October 1, 2004.
        Western has decided it is appropriate to proceed now with 
    application of the PMI to the SLCA/IP. Western's determination about 
    whether to apply the PMI to the SLCA/IP was delayed until the EIS on 
    the Post 1989 SLCA/IP Power Marketing Plan was completed and the 
    associated marketing criteria were finalized and implemented. That EIS 
    was completed in October 1996, and the associated post-1989 marketing 
    criteria were finalized and implemented April 1, 1997. Customers have 
    already completed IRPs in compliance with the requirements of EPAMP and 
    should be able to rely on Western's resources. Western also believes 
    that it is in the best interest of the United States to help ensure 
    that the Federal Government's investment in the Federal power projects 
    be repaid. All of the investment in power facilities, as well as up to 
    90 percent of the irrigation investment and substantial new 
    environmental expenses, is being repaid by revenues received from the 
    sale of electricity. Extending resource commitments provides relative 
    assurance to the United States of a continued revenue stream to repay 
    these expenses and obligations.
        Western also believes that although the electric industry is 
    undergoing many changes, it is important to extend resource commitments 
    now. These changes are affecting not only the competitiveness of 
    Western's customers, but also the diversity of energy providers in the 
    marketplace. Western must be able to operate in the new utility 
    environment in order to fulfill its mission of marketing Federal power. 
    Western's mission under current statutes is ongoing.
        For many of Western's customers, Federal power is an essential 
    component of their resource mix, and a resource extension is critical 
    to planning strategies for dealing with the utility restructuring. 
    Western recognizes the need for flexibility to respond to the changing 
    utility industry and to changing dam operations. Recently, Western and 
    its SLCA/IP customers entered into an amendment to power sales 
    contracts which provides great flexibility for dealing with changing 
    hydropower situations.
        Western recognizes that the Bureau of Reclamation is under a 
    continuing obligation to ensure that the operation of the hydroelectric 
    facilities comply with Federal environmental laws. Western may revise 
    the amount of power marketed by the SLCA/IP as required to respond to 
    changes in hydrology and river operations, upon 5 years' notice to 
    customers. Any such changes will be applied on a pro rata basis among 
    all customers.
    
    2. Allocations to Native American Tribes
    
        Native American tribes commented that they should be entitled to an 
    allocation of Federal power to help compensate them for the impacts to 
    their lands and lifestyles caused by the construction of the Federal 
    dams and power facilities. The tribes argued that the proposed power 
    pool of 4 percent of the SLCA/IP marketable resources was inadequate to 
    meet their current or future needs. Several comments were received that 
    the pool should be increased to 10-30 percent and if the tribes did not 
    use the total amount it could be returned to the current customers 
    after the reallocation process. The tribes were also concerned that the 
    30-day comment period was not adequate for them to determine their 
    loads and to make a reasonable recommendation of pool size.
        Some commentors suggested that Western should provide enough power 
    to supply 100 percent of tribal loads as well as meet future needs. 
    Others commented that it is not appropriate or even possible for 
    Western to do this.
        Western's current customers commented that the proposed power pool 
    was adequate to give tribes and other new customers a fair share of the 
    resource. They suggested that Western consider advancing the 2009 and 
    2014 resource pools to enhance the initial pool in 2004, with no 
    further changes in allocations for the term of the contracts, to allow 
    Native American tribes to make appropriate resource decisions. Both 
    tribes and customers commented that Western should work out 
    arrangements for tribes to receive the benefits of Federal power 
    through bill crediting or other beneficial arrangements.
        A comment was also made that Western should commission a study to 
    determine tribal loads within the SLCA/IP marketing area.
    Western's Response
        Effective October 1, 2004, Western will make allocations of SLCA/IP 
    power to eligible new customers which apply for SLCA/IP power. The 
    source of electricity for allocations to the new customers will be a 
    resource pool of SLCA/IP power not extended to existing customers and 
    available beginning October 1, 2004. Western has determined that a 
    resource pool size of 7 percent of resources available on October 1, 
    2004, combined with an additional reduction to Tri-State Generation and 
    Transmission
    
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    Association's (Tri-State) SLCA/IP resource commitment, will enable 
    Western to supply up to 12.5 percent of the current load of new utility 
    applicants and 65 percent of the load of Native American entities that 
    apply.
        Western believes that it would be in the best interests of both 
    current customers and potential customers including Native Americans to 
    establish one resource pool of a definite size at this time. Western 
    performed a study of tribal loads within the SLCA/IP marketing area. 
    Western received information on loads from tribes and serving utilities 
    for many potential customers. Others were estimated using data about 
    the size of the tribe and use of electricity in the local area. Western 
    determined that a power pool that would provide Native American tribes 
    enough power to serve 65 percent of their current loads would be 
    equitable to the tribes and to current customers. Serving tribal load 
    at this level would be consistent with DOE policy and the trust 
    responsibility that exists between Native Americans and the Federal 
    Government. Western's study indicates that a resource pool of the size 
    described in this Federal Register notice would be sufficient to meet a 
    fair share of Native American loads as well as those of other potential 
    new customers.
        In an exemption to the general policy, the four existing firm-power 
    customers of the SLCA/IP that are Native American entities--the Navajo 
    Tribal Utility Authority, the Ak Chin Indian Community, the Bureau of 
    Indian Affairs' Colorado River Agency, and the San Carlos Irrigation 
    Project--will be extended 100 percent of their pro rata share of the 
    SLCA/IP resource available on October 1, 2004. In addition, Western 
    will, if necessary, allocate additional SLCA/IP resources from a 
    resource pool to these or other Native American organizations such that 
    a minimum of 65 percent of the current load of each is served by 
    Federal power resources.
        For Native American tribes which currently receive power from 
    utilities that have allocations of Federal power, Western will take 
    into account the benefit received through the existing supplier when 
    determining the power allocation to the tribe.
        During the process of allocating the resource pool to customers, 
    which will begin after conclusion of this process, further information 
    on actual loads will be collected and used to determine the final 
    allocations from the resource pool. Western, to the extent it is able, 
    will provide technical assistance to tribes requesting assistance in 
    preparation of their applications and load data. After applications are 
    received and power allocated, unallocated power remaining in the pool 
    may be returned to current customers. If a tribe receives an allocation 
    but is unable to accept power on October 1, 2004, the power allocated 
    to the tribe will be provided to existing customers until such time as 
    the tribe is able to use the power.
        Western has also decided that the interest shown by tribes and 
    other potential new customers indicates that the resource pool should 
    be used to serve these loads rather than, as proposed in February 1997, 
    for encouragement of new technologies, conservation, or renewable 
    resources, or held in reserve by Western for contingencies. Other 
    eligibility criteria for allocations of SLCA/IP resources will be 
    addressed in subsequent Federal Register notices and mailings to 
    interested parties about the availability of SLCA/IP resources to new 
    customers. Western will initiate a separate public process soon to 
    accept applications from Native American tribes and potential new 
    customers for firm electric service of SLCA/IP power from October 1, 
    2004, through September 30, 2024.
        Finally, Western has agreed to work out arrangements for tribes to 
    receive the benefits of Federal power through bill crediting or other 
    beneficial arrangements.
    
    3. Other Comments
    
        A comment was received that the prices charged by Western for its 
    power sales are too low and that the price should be raised to finance 
    development of alternative forms of energy. Although comments about the 
    pricing of Western power are outside the scope of Western's proposal, 
    Western has a long record of encouraging its customers to conserve 
    energy and develop renewable resources without the need to introduce 
    changes in how its rates are set. Additionally, Western prohibits its 
    customers from profiteering by reselling their Federal power to 
    entities other than their end users. Comments on Western's rates may be 
    addressed when Western issues notices of proposed rate changes. 
    Comments on actions Western might take to further encourage its 
    customers to conserve energy and to develop renewable resources may be 
    addressed later this year when Western begins a formal public process 
    to reconsider its regulations concerning its customers' IRPs.
        Another comment suggested that Western should provide an official 
    public comment forum or official public record. Western has provided 
    adequate opportunity for formal comment. Four information and comment 
    forums were held in 1997, and an additional public comment forum was 
    held in Denver, Colorado, on January 6, 1999. Interested parties also 
    were encouraged during each of the three informational meetings, held 
    in early February of 1999, to comment in writing. Letters submitted in 
    response to the January 29, 1999, Federal Register notice on resource 
    pool size are part of Western's formal and official record. Western has 
    considered the comments presented by all parties on the proposed 2004 
    marketing plan. Western has also responded in detail to the comments 
    received as a result of the Notice of Inquiry in a separate document 
    published separately in the Federal Register. Those additional comments 
    are incorporated herein by reference.
        Several comment letters were received regarding the impact of a 
    pending merger between Tri-State and Plains Electric Generation and 
    Transmission Cooperative (Plains). One member of Plains, Navopache 
    Electric Cooperative (Navopache), is choosing not to participate in the 
    merger and cannot receive a portion of the SLCA/IP power allocated to 
    Plains under the terms of the currently effective power sales contract 
    between Western and Plains. Navopache has asked to receive an 
    independent allocation of power in 2004 to remediate the 
    ``overallocation'' to Tri-State.
        In another exception to the general policy concerning the 
    allocation to Tri-State, Western has decided to allocate to Tri-State 7 
    megawatts less than 93 percent of Tri-State's pro rata share of the 
    SLCA/IP resource available on October 1, 2004. The 7 mega-watts will be 
    part of the resource pool to be made available to new customers. This 
    additional reduction to Tri-State's allocation is being taken in 
    recognition of the fact that Tri-State would otherwise receive a post-
    2004 resource commitment based on all of the SLCA/IP power allocation 
    of Plains, even though Navopache has chosen not to use Tri-State as its 
    power supplier. Navopache is welcome to apply for power from the 
    resource pool as a new customer.
        In order to provide additional flexibility in addressing changing 
    conditions, the new contracts will have language that gives the 
    Administrator the discretion to adjust a customer's power allocation in 
    the event the customer merges with another organizational entity, 
    acquires or ``spins off'' another utility, joins or withdraws from a 
    membership-based organization, or adds members from a membership 
    organization.
    
    
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        Dated: June 10, 1999.
    Michael S. Hacskaylo,
    Administrator.
    [FR Doc. 99-16017 Filed 6-24-99; 8:45 am]
    BILLING CODE 6450-01-P
    
    
    

Document Information

Effective Date:
7/26/1999
Published:
06/25/1999
Department:
Western Area Power Administration
Entry Type:
Notice
Action:
Notice of decision.
Document Number:
99-16017
Dates:
Western's decision to apply the PMI, as modified herein, to the SLCA/IP will become effective on July 26, 1999.
Pages:
34414-34417 (4 pages)
PDF File:
99-16017.pdf