E7-13417. Consideration of Certain Public Utility Regulatory Policies Act Standards Set Forth in the Energy Policy Act of 2005

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of determination.

SUMMARY:

As a non-regulated electric utility, the Western Area Power Administration (Western) must consider and determine whether to implement certain standards under the Energy Policy Act of 2005 (EPAct of 2005), which amended the Public Utility Regulatory Policies Act of 1978 (PURPA). Western considered five standards: Net metering, fuel source diversity, fossil fuel generation efficiency, smart metering, and consumer interconnections. After considering the comments received, Western will not adopt the EPAct of 2005 standards for PURPA at this time.

DATES:

The decision to not adopt these standards is effective August 10, 2007.

FOR FURTHER INFORMATION CONTACT:

Deborah K. Emler, Desert Southwest Region, Federal Power Programs Manager, 615 S. 43rd Avenue, P.O. Box 6457, Phoenix, AZ 85005-6457, or by telephone [phone], or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

Western, as a non-regulated electric utility, is subject to Title XII, Subtitle E of the Energy Policy Act of 2005 and is required to consider the implementation of certain PURPA standards.

Western was established on December 21, 1977, under the Department of Energy Organization Act of 1977 (DOE Act). The DOE Act transferred to Western the power marketing functions of the Bureau of Reclamation (Reclamation), including the construction, operation, and maintenance of transmission lines and attendant activities.

Western sells power to cooperatives, municipalities, public utility districts, private utilities, Federal and State Agencies, Indian tribes, water systems and irrigation districts. Electric power marketed by Western is generated by the hydroelectric resources of Reclamation, the Corps of Engineers, and the International Boundary and Water Commission. Additionally, Western markets the United States' entitlement from the large Navajo coal-fired plant near Page, Arizona.

Western's transmission system, totaling approximately 17,000 line miles with over 290 substations, includes several project-specific systems, some of which are interconnected with one another. There are also numerous interconnections between Western's systems and other systems. Geographically, Western's transmission systems operate in 15 states that are generally west of the Mississippi River.

Western's obligations to its customers are contractually established. Customer requirements in excess of the power and energy available from Western must be obtained by the customer from other sources.

The major projects from which Western markets power include the Boulder Canyon Project, Central Arizona Project, Central Valley Project, Colorado River Storage Project, Colorado River Basin Project, Falcon-Amistad Project, Parker-Davis Project, and the Pick-Sloan Missouri Basin Program. Each of these projects is a separate entity with its own geographic area, power marketing criteria, revenue requirements, and power and energy rates. Consideration of the PURPA standards was on a Western-wide basis, as opposed to a project-by-project or system-by-system basis.

A brochure entitled “Preconsideration of Sections 1251, 1252, and 1254 of the Energy Policy Act of 2005” was prepared and made available for public review in September 2006, and posted at http://www.wapa.gov/​dsw/​pwrmkt/​PURPA/​. A public hearing was held on October 26, 2006, at Western's Corporate Service Office in Lakewood, CO, and written comments on Western's consideration of the standards were received through November 10, 2006. In addition to the publication of this notice, Western's final action will also be made available to the public at http://www.wapa.gov/​dsw/​pwrmkt/​PURPA/​.

Response to Comments

Western received comments from three entities within the comment period. Two entities supported Western's initial preconsideration to forego the implementation of the PURPA standards. A third entity expressed a similar agreement with Western's initial assessment regarding fossil fuel generation efficiency standards, (Section 1251(a)(13)), and smart metering, (Section 1252(a)(14)). However, the same entity did express several other concerns.

1. An objection was raised regarding Western's assertion that there was no need for action in response to the net metering standard, (Section 1251(a)(11)). The entity requested a guarantee of net metering services, as opposed to being covered by a broad categorization of Western's primary customers. This commenter represents a group of Federal agencies that are end users of electricity and are not utilities. Applying a net metering standard to a customer served by multiple power suppliers presents unique challenges. Western currently has an ongoing metering issue with a Federal agency customer regarding a renewable energy system that has proven quite difficult to resolve. Western believes that these situations are better dealt with on a case-by-case basis. Western prefers to establish policy on an agency-wide basis and not by exception for a narrow segment of our customer base. However, Western commits to work with its end use customers in a targeted and focused manner to provide assistance in implementing net metering services.

2. In the case of fuel sources, (Section 1251(a)(12)), Western was asked to adopt this standard on a contingent basis. The thought was that if Western's mission changes over the next decade in response to increased demand, the diversification standard would become relevant and should be held as a contingent standard to cover that possibility.

Western does not own generation and predominately markets hydroelectric power. Western sees no value in adopting a diverse fuel source standard when Congress has not given us authority to generate power. If Congress authorizes Western to own generating resources at some point in the future, Western will consider implementing a fuel source diversity standard at that time.

3. Regarding interconnection (Section 1254(a)(15)), one commenter indicated substantial interest in energy conservation and was interested in preserving a requirement through the proposed standard that Western aid them, as a retail customer, in adopting energy conservation measures, such as interconnection service to on-site generation facilities.

Western is primarily a bulk wholesale electric provider that provides a very limited amount of energy to end-use loads. Western's power is marketed by individual projects primarily to preference customers, most of which are electric utilities. These electric utilities in turn blend the Federal hydropower resource into their resource base and sell it to their retail customers. Those preference customers would principally be responsible for interconnection service “to the local distribution facilities”, as opposed to Western.

Western's facilities are primarily bulk transmission system facilities. Western's policies and procedures for interconnections to its power system are set forth in Western's Open Access Transmission Tariff which is on file with the Federal Energy Regulatory Commission. These policies and procedures will be used to manage all interconnection requests that Western receives. Western commits to work with its end use customers as needed on a case-by-case basis to address consumer interconnection issues.

4. One entity indicated that its interests were not represented by the general treatment that has been given to Western's customer base in considering the proposed standards. This commenter stated that the customer had substantial and ongoing renewable energy and energy conservation programs that would be positively impacted by the adoption of the PURPA standards. The guarantees provided under those standards are essential to planning and the viability of renewable energy and conservation programs.

For the reasons already expressed in response to comments on the net metering and consumer interconnection standards, Western prefers to establish policy on an agency-wide basis and not by exception for a narrow segment of our customer base. Western intends to support ongoing customer renewable energy and energy conservation in a targeted manner on a case-by-case basis.

Environmental Compliance

In compliance with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321, et seq.); the Council on Environmental Quality Regulations for implementing NEPA (40 CFR parts 1500-1508); and DOE NEPA Implementing Procedures and Guidelines (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.

Dated: June 29, 2007.

Timothy J. Meeks,

Administrator.