[Federal Register Volume 60, Number 111 (Friday, June 9, 1995)]
[Notices]
[Pages 30533-30535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14208]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Final Principles of Integrated Resource Planning for Use in
Resource Acquisition and Transmission Planning
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of final principles.
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SUMMARY: The Western Area Power Administration (Western) will use
principles of integrated resource planning (IRP) in its acquisition of
resources (supply-side and demand-side) and in its transmission
planning. Western published proposed principles for public
consideration in the Federal Register on December 6, 1994 (59 FR
62724). After considering public comment on that proposal, Western has
adopted the final principles of IRP contained in this notice as the
policy under which project-specific resource acquisition and
transmission planning procedures will be developed. These project-
specific procedures will be developed through separate public
processes.
DATES: The final principles of IRP will be effective on July 10, 1995.
BACKGROUND: On August 9, 1994, Western provided notice of its proposed
Energy Planning and Management Program (Program), 59 FR 40543,
concerning requirements for Western's customers to undertake integrated
resource planning consistent with the statutory requirements of the
Energy Policy Act of 1992 (section 114 of the Energy Policy Act,
codified at 42 U.S.C. Secs. 7275-7276c). In that notice, Western
committed to develop and use principles of IRP in its own resource
acquisition and transmission planning. The separate public process to
develop principles of IRP began with publication of draft principles of
IRP in the Federal Register on December 6, 1994. A public information
and comment forum was held in Denver, Colorado, on January 12, 1995, to
explain the proposed principles and receive comments on the proposal.
Written comments on the proposal were received through March 7, 1995.
The final Western principles of IRP outlined in this notice will be
used by Western in its resource acquisition and transmission planning
and differ from those proposed in the Program for Western's customers.
Western's resource acquisitions are primarily short-term purchases of
supplemental resources to firm variable hydropower generation and are
not acquisitions of resources to meet long-term load growth. The
principles of IRP also have been adapted to Western's transmission
planning process, which does not deal with new generation resources,
only new or upgraded transmission facilities.
Western currently is involved in other public processes that can
have an impact on future purchase power and transmission requirements.
The final principles of IRP will be applied when acquiring resources or
planning transmission related to the decisions from these other public
processes. These principles will serve as the policy under which
specific procedures are developed as each project identifies the need
to acquire resources or increase Western's transmission capability.
RESPONSE TO COMMENTS: Western received 4 oral comments at the January
12, 1995, public meeting and 11 comment letters on the proposed
principles of IRP published December 6, 1994. The comments received and
Western's responses follow.
1. Comment: The scope of the principles of IRP should be broadened
to possibly include examination of project-use loads.
Response: Western is responsible for marketing the power surplus to
the needs of the Bureau of Reclamation (Reclamation) projects.
Reclamation has jurisdiction for operation of the projects. However, we
do agree that there may be opportunities for collaborating with
Reclamation to expand the IRP process to include, where feasible,
energy efficiency improvements at project-use facilities. Western and
Reclamation completed a study in 1992 that indicated very limited
opportunity for cost-effective improvements at Central Valley Project
project-use facilities. However, Western may continue to evaluate such
opportunities as part of project-specific resource acquisition
evaluation criteria.
2. Comment: Western should increase cooperation with Reclamation on
planning studies to extract the maximum possible benefit out of the
projects to reduce the need for additional purchases.
Response: We agree with this comment. As part of the National
Performance Review, Reclamation is reviewing its power functions and
operations. Western is cooperating in this effort.
3. Comment: The evaluation of supply-side and demand-side
alternatives requires some additional clarification of the interplay
between the customer demand-side management (DSM) and the Western DSM
programs.
Response: The evaluation of demand-side alternatives for customers
is generally focused on use of DSM to impact the customer's total load
to reduce or delay resource acquisitions. Since Western is a partial
requirements supplier for most of its customers, the evaluation of
Western DSM alternatives will focus upon whether DSM will impact that
portion of a customer's load supplied by Western (Western's contract
obligation) to reduce the customer's need for the Western resource,
which may, in some cases, reduce Western's resource acquisitions.
Western DSM alternatives also may include improvements that reduce
losses or project use energy efficiency improvements, if such
alternatives reduce the amount of energy that Western needs to acquire
to meet its contract commitments. A customer DSM activity that reduces
only the amount a customer self-generates or purchases from an
auxiliary supplier has no impact on Western's obligation and,
therefore, is not a Western DSM alternative under these principles.
4. Comment: Western's proposal to apply principles of IRP to
resource acquisition and transmission planning was strongly supported
by one commenter, and Western was commended for developing an internal
IRP process by two commenters at the January 12, 1995, public meeting.
Response: Western appreciates the support of these commenters.
5. Comment: Several commenters expressed concerns that these
principles of IRP should not interfere with or duplicate existing
partnership efforts between our firm power customers and Area Offices
for resource acquisition and transmission planning.
Response: Western fully supports the on-going processes between
Area Offices and customers relating to cost containment, transmission
planning and resource acquisition. However, one of the basic
foundations of IRP is full public involvement in resource decisions. To
the extent that on-going partnership processes, such as the Glen Canyon
Replacement Power process, include involvement by all interested
stakeholders, those processes can integrate these final principles of
IRP within their decision making process without additional effort.
6. Comment: The Salt Lake City Area replacement power process for
Glen Canyon resources provides for each [[Page 30534]] customer to
decide if it wants its lost resource to be replaced by Western or by
the customer. Principle number I.2 would violate this by taking the
decision away from the customer and letting it be made by interested
stakeholders.
Response: Western has no intent to overturn any agreements in the
Glen Canyon power replacement process. At the January 12, 1995, public
meeting, Western recognized that ``* * * the extent of Western's future
resource acquisitions * * * will depend on the choices made by long-
term firm power customers to arrange their own purchases of firming
energy or to have Western acquire firming resources for them.''
Principle number I.2 has been modified to avoid confusion by deleting
the provision for public input into the necessity for resource
acquisitions and only provide for public input in the development of
criteria to be used in evaluating power resource alternatives. This
allows customers to decide whether or not Western should acquire
firming resources for them and allows all interested stakeholders input
into the criteria for evaluating resource alternatives consistent with
the intent of integrated resource planning.
7. Comment: Several commenters questioned the costs and benefits to
Western and the power customers of yet another public process.
Response: It is not Western's intent to add the additional cost and
burden of yet another process. It is, however, Western's intent to
fully integrate the principles of IRP into ongoing Western-Customer
partnership processes and to ensure that all stakeholders have an
opportunity to provide input into Western's resource acquisition and
transmission planning processes. Western believes that making informed,
least-cost resource acquisition and transmission planning decisions
with involvement by all interested stakeholders will be worth the
effort.
8. Comment: Principles of IRP will become less useful as the
industry becomes more competitive.
Response: Western believes that the principles of IRP contained in
this notice will facilitate Western's competitiveness by helping it
make informed decisions with input from all interested stakeholders. In
addition, the principles of IRP can be used to identify uncertainties
associated with the more competitive generation sector of the industry,
thereby providing the mechanism to evaluate risks associated with
resource acquisition and transmission planning decisions.
9. Comment: These principles could duplicate, delay, and complicate
Western's participation in transmission projects proposed through a
regional transmission group, such as the Western Regional Transmission
Association (WRTA) and the Southwest Regional Transmission Association
(SWRTA).
Response: Western does not believe that these principles will
impede its ability to participate in regional transmission groups. It
is Western's intent to integrate the principles of IRP into Western's
ongoing processes in order to ensure that transmission plans proposed
by Western will have the benefit of input from all interested
stakeholders. Western has joined WRTA and SWRTA. Both groups will
promote coordinated planning and efficient use of transmission capacity
and will provide another means for involvement by Western's customers.
As appropriate, Western can invite other interested parties to attend
SWRTA meetings as guests of Western. Additionally, both WRTA and SWRTA
allow for State regulatory commissions' involvement as ex officio
members. It is anticipated that some form of regional transmission
group will be established in the Mid-Continent Area Power Pool. This
will also facilitate public involvement in considering Western's future
transmission needs.
10. Comment: Western needs to be creative about DSM when applying
these principles to actual decisions.
Response: We agree. This issue will be addressed during Area Office
development of resource evaluation criteria at the time that a resource
acquisition appears to be necessary.
11. Comment: Customers and the broader public should have
opportunity to comment before Western signs long-term purchase power
contracts.
Response: These principles provide opportunity for all interested
stakeholders to participate in the development of resource evaluation
criteria by an Area Office for project-specific resource acquisitions.
In addition, customers and the broader public will continue to have an
opportunity to comment on power marketing plans which determine the
need for long-term purchase power contracts. It is unnecessary and
duplicative to have an additional comment opportunity on individual
contracts implementing the evaluation criteria decisions.
12. Comment: The transmission planning evaluation criteria should
include the following criteria that were discussed at the January 12,
1995, public meeting: (1) increased revenues from new transmission
exceed costs; (2) customers benefit sufficiently that they support the
project; or (3) new facilities are funded directly by others.
Response: Western does not feel that it is appropriate to include
these criteria in the final principles of IRP since they are part of
Western's internal decision rules as currently adopted in its strategic
planning process that may change from time to time based on customer
feedback or Department of Energy or Congressional direction. However,
Western is committed to our strategic planning process which currently
includes these evaluation criteria. The intent of the principles of IRP
as applied to transmission planning is to foster wide and early public
involvement and a free exchange of ideas to develop alternatives that
best meet regional needs.
13. Comment: Western should change the scope to specify purchases
for 2 years or longer or recurring purchases of more than 250
gigawatthours per year.
Response: Western believes such a requirement in the scope would
reduce the flexibility of the Area Offices and interested stakeholders
to collaboratively determine the amount of recurring purchases that
would justify use of these principles. At the January 12, 1995,
meeting, Western described a ``continuous'' or ``recurring'' purchase
to mean, ``* * * a resource need, capacity and/or energy of a fixed
quantity and seasonal pattern and over an extended period, usually
longer than 5 years.'' Western believes that it is important to
maintain flexibility within these principles.
14. Comment: The principles of IRP do not apply to transmission
planning.
Response: Western believes that the principles of IRP do apply for
public participation and consideration of alternatives to construction.
15. Comment: One commenter asked several questions concerning
implementation of these principles: What are classified as renewables?
Will decentralized, smaller resources, such as PV, be considered as
renewables? Will public education and incentives for conservation be
included in DSM programs? Will global climate change needs be included
in considerations of environmental impact?
Response: Western believes that consideration of these important
issues at this time is beyond the scope of these principles. However,
these issues will be considered in Area Office development of
evaluation criteria for specific resource acquisition or transmission
planning activities.
SCOPE: The principles of IRP will apply specifically to:
1. Resource acquisitions involving a commitment to purchase a
resource [[Page 30535]] continuously or a commitment to make recurring
purchases. Normally, formal principles will not be applied to
unpredictable seasonal purchases, day-to-day economy energy purchases,
and other short-term transactions.
2. New or upgraded transmission system construction with a 1995
total cost estimate in excess of $5 million for an individual project.
This 1995 cost level will be adjusted each year using the construction
cost index. Normally, formal principles of IRP will not be applied to
transmission facilities needed for reliability. Transmission facilities
needed for reliability will be based on mitigating problems related to
power system operations or replacing unsafe, aged, worn out, or
inefficient equipment.
Where practicable, principles of IRP will also be applied
informally to other Western transmission projects and/or resource
acquisitions.
PROPOSED PRINCIPLES OF INTEGRATED RESOURCE PLANNING:
I. Resource Acquisition Principles: Western's resource acquisition
activities will be determined by project-specific power marketing
plans, hydropower production capability, and the application of the
following proposed principles of IRP:
1. Western will consider a full range of resource options, both
supply-side and demand-side, as well as renewable resource options.
2. On a project-by-project basis, Western, through a public process
involving interested stakeholders, will develop criteria to be used in
evaluating power resource alternatives.
3. Evaluation criteria will address cost, environmental impact,
dependability, dispatchability, risk, diversity, and the ability to
verify demand-side alternatives. Evaluation criteria will be reviewed
as the need for resources changes or when long-term commitments to
purchase power expire.
4. Evaluation criteria will be consistent with Western's power
marketing policy, which states that Federal power is to be marketed in
such a manner as to encourage the most widespread use thereof at the
lowest possible rates to consumers consistent with sound business
principles. The policy, found in Delegation Order No. 0204-108, is
derived from statutes authorizing the sale of power from both
Department of the Army and Department of the Interior hydroelectric
projects. These statutes include section 5 of the Flood Control Act of
1944, 16 U.S.C. 825 and section 9(c) of the Reclamation Project Act of
1939 .
5. Resource acquisition planning will be consistent with power
marketing plans and associated contractual obligations.
6. Resource acquisition decisions will be documented and made
available to Western's power customers and the public.
II. Transmission Planning Principles: Western's transmission
planning is conducted to assess the capability of the Federal
transmission system to provide adequate and reliable electric service
to its customers and the interconnected power grid. The principles of
IRP that will apply to Western's transmission planning are as follows:
1. Western will conduct early and wide public involvement to
confirm the purpose and need of a proposed transmission project.
Western proposes that a public meeting be held early in the planning
process once the need for system modifications has been identified and
prior to start of the National Environmental Policy Act of 1969 (NEPA)
process. To the extent appropriate, Western's use of principles of IRP
for transmission planning will include existing forums and customer
partnerships with regard to public involvement.
2. At the public meeting, Western will describe the need to be met
and seek comments on alternative ways to address the need, including
demand-side management, new construction, or upgrade of existing
facilities.
3. Western will include opportunity for participation in the early
and wide public involvement process by interested parties, including
power customers, residents of the area, environmental groups, various
resource suppliers, including renewable generation entities, and other
transmission utilities in the area, as well as other participants in
the proposed transmission project if it is a joint participation
project.
4. Alternatives that are reasonable will be initially evaluated for
cost, general environmental impacts, and system reliability concerns in
coordination with interested parties. Data from this initial evaluation
will be included in the subsequent NEPA analysis.
5. The results of this preliminary evaluation will be made
available to Western's power customers and the public.
ENVIRONMENTAL EVALUATION: Methods, procedures, and criteria for
implementing these principles of IRP and any related environmental
effects will be project-specific. Western will conduct appropriate
public processes under NEPA and its implementing regulations for these
project-specific actions.
DETERMINATION UNDER EXECUTIVE ORDER 12866: DOE has determined this is
not a significant regulatory action because it does not meet the
criteria of Executive Order 12866, 58 FR 51735. 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.
Issued at Golden, Colorado, May 17, 1995.
J.M. Shafer,
Administrator.
[FR Doc. 95-14208 Filed 6-8-95; 8:45 am]
BILLING CODE 6450-01-P
