E9-20652. Notice of Intent To Contract for Hydroelectric Power Development on the South Canal, Uncompahgre Project, Colorado

AGENCY:

Bureau of Reclamation, Interior.

ACTION:

notice of intent to accept proposals, select lessee, and contract for hydroelectric power development on the South Canal, Uncompahgre Project, Colorado.

SUMMARY:

Current Federal policy allows non-Federal development of electrical power resource potential on Federal water resource projects. The Bureau of Reclamation (Reclamation) will consider proposals for non-Federal development of hydroelectric power on the South Canal of the Uncompahgre Project. Reclamation is considering such hydroelectric power development under a lease of power privilege. No Federal funds will be available for such hydroelectric power development. The Uncompahgre Project is a Federal Reclamation project. This Notice presents background information, proposal content guidelines, and information concerning selection of a non-Federal entity to develop hydroelectric power on the South Canal.

DATES:

A written proposal and seven copies must be submitted on or before 5 p.m. (Mountain Standard Time) on Monday, February 1, 2010. A proposal will be considered timely only if it is received in the office of the Area Manager on or before 5 p.m. on the above-designated date. Interested entities are cautioned that delayed delivery to the Area Manager's office due to failures or misunderstandings of the entity and/or of mail, overnight, or courier services will not excuse lateness and, accordingly, are advised to provide sufficient time for delivery. Late proposals will not be considered.

ADDRESSES:

Send written proposal and seven copies to Ms. Carol DeAngelis, Area Manager, Bureau of Reclamation, Western Colorado Area Office, 2764 Compass Drive, Suite 106, Grand Junction, Colorado 81506; telephone [phone].

FOR FURTHER INFORMATION CONTACT:

Technical data may be obtained from Mr. Dan Crabtree, Bureau of Reclamation, Western Colorado Area Office, 2764 Compass Drive, Suite 106, Grand Junction, Colorado 81506; telephone [phone]. Reclamation will be available to meet with interested entities only upon written request to Mr. Dan Crabtree at the above-cited address. Upon request, Reclamation will provide an opportunity for a site visit. Reclamation reserves the right to schedule a single meeting and/or visit to address the questions of all entities that have submitted questions or requested site visits.

Information related to operation and maintenance of the South Canal may be obtained from Mr. Marc Catlin, Uncompahgre Valley Water Users Association, P.O. Box 69, Montrose, Colorado 81402; telephone [phone].

SUPPLEMENTARY INFORMATION:

The Uncompahgre Project, located in west-central Colorado along the Uncompahgre River in the Colorado River Basin, was authorized by the Secretary of the Interior on March 14, 1903, under provisions of the Reclamation Act of 1902. After the passage of the Reclamation Act of 1902, the Uncompahgre Project was selected for development and the United States began construction in 1904. The Act of June 22, 1938, 52 Stat. 941, authorized the Secretary of the Interior to develop or sell surplus power from the Uncompahgre Project. The Uncompahgre Valley Water Users Association, under its contracts with the United States, has certain operation, maintenance, and replacement responsibilities and obligations concerning the South Canal and Uncompahgre Project.

Reclamation is considering hydroelectric power development on the South Canal under a lease of power privilege. A lease of power privilege is an alternative to Federal hydroelectric power development. A lease of power privilege is a contractual right given to a non-Federal entity to use a Reclamation facility for electric power generation consistent with Reclamation project purposes. Leases of power privilege have terms not to exceed 40 years. The general authority for lease of power privilege under Reclamation law includes, among others, the Town Sites and Power Development Act of 1906 (43 U.S.C. Sec. 522) and the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) (1939 Act).

Reclamation will be the lead Federal agency for ensuring compliance with the National Environmental Policy Act (NEPA) of any lease of power privilege considered in response to this Notice. Leases of power privilege may be issued only when Reclamation has completed NEPA and related environmental compliance. Any lease of power privilege on the South Canal must accommodate existing contractual commitments related to operation and maintenance of the South Canal and other Uncompahgre Project facilities. The lessee (i.e., successful proposing entity) would be required to enter into a contract with the Uncompahgre Valley Water Users Association to coordinate operation and maintenance of any proposed hydropower developments with existing Federal features.

All costs incurred by the United States related to development and operation and maintenance under a lease of power privilege, including NEPA compliance and development of the lease of power privilege, would be at the expense of the lessee. In addition, the lessee would be required to make annual payments to the United States for the use of a government facility in the amount of at least 3 mills per kilowatt-hour of generation. Under the lease of power privilege, provisions will be included for inflation of the annual payment with time. Such annual payments to the United States would be deposited as a credit to the Reclamation Fund.

Proposal Content Guidelines

Interested parties should submit proposals explaining in as precise detail as is practicable how the hydropower potential would be developed. Factors which a proposal should consider and address include, but are not limited to, the following:

(a) Provide all information relevant to the qualifications of the proposing entity to plan and implement such a project, including, but not limited to, information about preference status, type of organization, length of time in business, experience in funding, design and construction of similar projects, industry rating(s) that indicate financial soundness and/or technical and managerial capability, experience of key management personnel, history of any reorganizations or mergers with other companies, and any other information that demonstrates the interested entity's organizational, technical, and financial ability to perform all aspects of the work. Include a discussion of past experience in operating and maintaining similar facilities and provide references as appropriate. The term “preference entity,” as applied to a lease of power privilege, means an entity qualifying for preference under Section 9(c) of the 1939 Act as a municipality, public corporation or agency, or cooperative or other nonprofit organization financed in whole or in part by loans made pursuant to the Rural Electrification Act of 1936, as amended.

(b) Provide geographical locations and describe principal structures and other important features of the proposed development including roads and transmission lines. Estimate and describe installed capacity and the capacity of the power facilities. Also describe seasonal or annual generation patterns. Include estimates of the average amount of electrical energy that would be produced from the facility for each month of average, dry, or wet water years. If capacity and energy can be delivered to another location, either by the proposing entity or by potential wheeling agents, specify where capacity and energy can be delivered. Include concepts for power sales and contractual arrangements, involved parties, and the proposed approach to wheeling, if required.

(c) Indicate plans for acquiring title to or the right to occupy and use lands necessary for the proposed development, including such additional lands as may be required during construction.

(d) Identify water rights applicable to the operation of the proposed development(s), the holder of such rights, and how these rights would be used, acquired, or perfected.

(e) Discuss any studies necessary to adequately define impacts of the development on the Uncompahgre Project and the environment. Describe any significant environmental issues associated with the development and the proposing entity's approach for gathering relevant data and resolving or mitigating such issues to protect and enhance the quality of the environment. Explain any proposed use of the hydropower development for conservation and utilization of the available water resources in the public interest.

(f) Describe anticipated contractual arrangements with the Uncompahgre Valley Water Users Association which has operation and maintenance responsibility for the Uncompahgre Project feature(s) that are proposed for utilization in the hydropower development under consideration. Define how the hydropower development would operate in harmony with the Uncompahgre Project and existing applicable contracts related to operation and maintenance of Uncompahgre Project feature(s) being considered for modification.

(g) Describe plans for assuming liability for damage to the operational and structural integrity of the Uncompahgre Project caused by construction, operation, and/or maintenance of the hydropower development.

(h) Identify the organizational structure planned for the long-term operation and maintenance of any proposed hydropower development.

(i) Provide a management plan to accomplish such activities as planning, NEPA compliance, lease of power privilege development, design, construction, facility testing, and start of hydropower production. Prepare schedules of these activities as applicable. Describe what studies are necessary to accomplish the hydroelectric power development and how the studies would be implemented.

(j) Estimate development cost. This cost should include all investment costs such as the cost of studies to determine feasibility, NEPA compliance, design, construction, and financing as well as the amortized annual cost of the investment. Also, the annual operation, maintenance, and replacement expense for the hydropower development; annual payments to the United States; expenses that may be associated with the Uncompahgre Project; and the anticipated return on investment should be included. If there are additional transmission or wheeling expenses associated with the hydropower development, these should also be included. Identify proposed methods of financing the hydropower development. An economic analysis should be presented that compares the present worth of all benefits and the costs of the hydropower development.

Selection of Lessee

Reclamation will evaluate proposals received in response to this published Notice. Reclamation will give more favorable consideration to proposals that (1) are well adapted to developing, conserving, and utilizing the water and protecting natural resources; (2) clearly demonstrate that the offeror is qualified to develop the hydropower facility and provide for long-term operation and maintenance; and (3) best share the economic benefits of the hydropower development among parties to the lease of power privilege. A proposal will be deemed unacceptable if it is inconsistent with Uncompahgre Project purposes, as determined by Reclamation.

Reclamation will give preference to those entities that qualify as preference entities (as defined under Proposal Content Guidelines, item (a), of this Notice) provided that their proposal is at least as well adapted to developing, conserving, and utilizing the water and natural resources as other submitted proposals and that the preference entity is well qualified. Preference entities would be allowed 90 days to improve their proposals, if necessary, to be made at least equal to a proposal(s) that may have been submitted by a non-preference entity.

Power Purchasing and/or Marketing Considerations

The lessee would be responsible for transmission and marketing of the power generated by the proposed project.

Notice and Time Period To Enter Into Lease of Power Privilege

Reclamation will notify, in writing, all entities submitting proposals of Reclamation's decision regarding selection of the potential lessee. The selected potential lessee will have two years from the date of such notification to accomplish NEPA compliance and enter into a lease of power privilege for the proposed development of hydropower at South Canal. The lessee will then have up to two years from the date of execution of the lease to complete the designs and specifications and an additional year to begin construction. Such timeframes may be adjusted for just cause resulting from actions and/or circumstances that are beyond the control of the lessee.

Dated: July 24, 2009.

Larry Walkoviak,

Regional Director—UC Region.