E8-19153. Central Valley Project-Rate Order No. WAPA-139

AGENCY:

Western Area Power Administration, DOE.

ACTION:

Notice of Order Temporarily Extending Formula Rates for Power, Transmission, and Ancillary Services.

SUMMARY:

This action is to temporarily extend the existing formula rates for power, transmission, and ancillary services for the Central Valley Project (CVP), transmission service on the California-Oregon Transmission Project (COTP), transmission service on the Pacific Alternating Current Intertie (PACI), and third-party transmission service through September 30, 2011. This action also extends the Western Area Power Administration's (Western) recovery methodology of the Path 15 revenue requirement through September 30, 2011. Without this extension, formula rates for power, transmission, and ancillary services for the CVP, transmission service on the COTP, transmission service on the PACI, and third-party transmission service will expire September 30, 2009.

FOR FURTHER INFORMATION CONTACT:

Mr. Thomas R. Boyko, Regional Manager, Sierra Nevada Customer Service Region, Western Area Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, [phone], e-mail [e-mail] or Mr. Charles J. Faust, Rates Manager, Sierra Nevada Customer Service Region, Western Area Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, [phone], e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

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 the Administrator of the Western Area Power Administration, (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).

The existing formula rates contained under Rate Order No. WAPA-115^[1] became effective on January 1, 2005, and were approved for 4 years and 9 months through September 30, 2009. Subsequent to Rate Order No. WAPA-115, Western completed a minor rate adjustment, Rate Order No. WAPA-128,^[2] which removed the reactive power costs from the Transmission Revenue Requirement and recovered these costs in the Power Revenue Requirement. This rate adjustment modified the formula rates associated with power and transmission service for the CVP and transmission service on the COTP and PACI. WAPA-128 became effective on September 1, 2006, and was approved for a period of 3 years and 1 month. Both rate orders (WAPA-115 and WAPA-128) expire on September 30, 2009. Western is extending the existing formula rates for power, transmission, and ancillary services on the CVP, transmission service on the COTP, transmission service on the PACI, third-party transmission service, and the Path 15 revenue requirement methodology in accordance with 10 CFR part 903.23(b). Western seeks this extension to provide sufficient time for an informal rate process which will allow Western to meet and collaborate with its customers on the development of rates to replace the current rates. This extension allows Western and its customers the opportunity to evaluate the impacts of proposed market and industry initiatives, such as the California Independent System Operator's (CAISO) Market Redesign and Technology Upgrade (MRTU) and FERC Orders 890 and 890A, on the existing rate designs. The existing formula rate methodology collects annual revenue sufficient to recover annual expenses (including interest) and capital requirements, thus ensuring repayment of the project within the cost recovery criteria set forth in DOE Order RA 6120.2. This extension will permit a concurrent public process and rate approval period for the formula rates for power, transmission, and ancillary services for the CVP, transmission service on the COTP, transmission service on the PACI, and third-party transmission service through September 30, 2011. Upon its approval, Rate Order No. WAPA-115 and Rate Order No. WAPA-128 will be extended under Rate Order No. WAPA-139.

Western did not have a consultation and comment period and did not hold public information and comment forums which, in accordance with 10 CFR part 903.23(b), are not required. Following review of Western's proposal within the DOE, I hereby approve Rate Order No. WAPA-139 which extends the existing formula rates for the power, transmission, and ancillary services for the CVP, transmission service for the COTP, transmission service for the PACI, and third-party transmission service through September 30, 2011. This approval also extends Western's recovery of the Path 15 revenue requirement through the same time period.

Dated: August 12, 2008.

Jeffrey F. Kupfer,

Acting Deputy Secretary.

Department of Energy

Deputy Secretary

Rate Order No. WAPA-139.

In the Matter of: Western Area Power Administration Rate Extension for the Central Valley Project, the California-Oregon Transmission Project, the Pacific Alternating Current Intertie, and Third-Party Transmission. Extend Path 15 Revenue Requirement Methodology

Order Confirming and Approving a Temporary Extension of the Formula Rates for Power, Transmission, and Ancillary Services for the Central Valley Project, Transmission Service for the California-Oregon Transmission Project, Transmission Service for the Pacific Alternating Current Intertie, and Third-Party Transmission Service

The formula rates for power, transmission, and ancillary services were established following 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 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 Project Act of 1939 (43 U.S.C. 485h(c)), and other Acts that specifically apply to the project system 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 the Administrator of the Western Area Power Administration (Western), (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).

Background

The existing formula rates for custom product power, ancillary services, and third-party transmission service contained in Rate Order No. WAPA-115^[1] were approved for 4 years and 9 months and are effective through September 30, 2009. The existing formula rates for power and transmission service on the Central Valley Project (CVP), transmission service on the California-Oregon Transmission Project (COTP), and the Pacific-Alternating Current Intertie (PACI) contained in Rate Order No. WAPA-128 ^[2] were approved for 3 years and 1 month and are effective through September 30, 2009.

Discussion

Western is entering a public process to modify the existing formula rates for power, transmission, and ancillary services for the CVP, transmission service on the COTP, transmission service on the PACI, and third-party transmission service. This public process will also address Western's recovery of the Path 15 revenue requirement. Western seeks this extension to provide more time for an informal rate process which will allow Western to meet and collaborate with its customers on the development of rates to replace the current rates. This extension allows Western and its customers the opportunity to evaluate the impacts of proposed market and industry initiatives, such as the California Independent System Operator's Market Redesign and Technology Upgrade and FERC Orders 890 and 890A, on the existing rate designs. The existing power, transmission, and ancillary services formula rate methodologies collect annual revenues sufficient to recover annual expenses, including interest and capital requirements, thus ensuring repayment of the project within the cost recovery criteria set forth in DOE Order RA 6120.2. As permitted by 10 CFR part 903.23(b), Western did not have an advanced notice and comment period and did not hold public information and comment forums on the temporary extension of the formula rates for power, transmission, and ancillary services for the CVP, transmission service on the COTP, transmission service on the PACI, and third-party transmission service.

Order

In view of the above and under the authority delegated to me, I hereby extend for a period effective from October 1, 2009, through September 30, 2011, the existing formula rates under Rate Schedules CV-F12, CPP-1, CV-T2, CV-NWT4, PACI-T2, COTP-T2, CV-TPT6, CV-SPR3, CV-SUR3, CV-RFS3, CV-EID3 for the Central Valley and the California-Oregon Transmission Projects, and the Pacific-Alternating Current Intertie of the Western Area Power Administration.

Dated: August 12, 2008.

Jeffrey F. Kupfer,

Acting Deputy Secretary.

Footnotes

1.  WAPA-115 was approved by FERC on a final basis on October 11, 2005, in Docket No. EF05-5011-000 (113 FERC ¶ 61,026).

2.  WAPA-128 was approved by FERC on a final basis on January 25, 2007, in Docket No. EF06-5011-000 (118 FERC ¶ 61,052 (2007)).

1.  Rate Order No. WAPA-115, 69 FR 70510 (December 6, 2004). Approved by FERC on October 11, 2005 (113 Commission ¶ 61,026).

2.  Rate Order No. WAPA-128, 71 FR 45821 (August 10, 2006). Approved by FERC on January 25, 2007 (118 Commission ¶ 61,052).