Pick-Sloan Missouri Basin Program-Eastern Division-Rate Order No. WAPA-140, 47945-47947 [E8-18953]
Download as PDF
<![CDATA[
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program—
Eastern Division—Rate Order No.
WAPA–140
Western Area Power
Administration, DOE.
ACTION: Notice of Proposed Power Rates.
AGENCY:
SUMMARY: The Western Area Power
Administration (Western) is proposing
revised rates for Pick-Sloan Missouri
Basin Program—Eastern Division (P–
SMBP—ED) firm electric and firm
peaking power service. Current rates,
under Rate Schedules P–SED–F9 and P–
SED–FP9, extend through December 31,
2012, but are not sufficient to meet the
P–SMBP—ED revenue requirements.
The proposed rates will provide
sufficient revenue to pay all annual
costs, including interest expenses, and
repay required investments within the
allowable periods. Western will prepare
and make available a brochure that
provides detailed information on the
proposed rates. The proposed rates,
under Rate Schedules P–SED–F10 and
P–SED–FP10, are scheduled to go into
effect on January 1, 2009, and will
remain in effect through December 31,
2013, or until superseded. Publication
of this Federal Register notice begins
the formal process for the proposed rate
adjustment.
DATES: The consultation and comment
period begins today and will end
November 13, 2008. Western will
present a detailed explanation of the
proposed rates at public information
forums. Public information forum dates
are:
1. September 9, 2008, 9 a.m. to 10:30
a.m. MDT, Denver, CO.
2. September 10, 2008, 8 a.m. to 9:30
a.m. CDT, Sioux Falls, SD.
Western will accept oral and written
comments at public comment forums.
Public comment forums will be held on
the following dates:
1. September 9, 2008, 11:30 a.m. to
12:30 p.m. MDT, Denver, CO.
2. September 10, 2008, 10:30 a.m. to
12 p.m. CDT, Sioux Falls, SD.
Western will accept written
comments any time during the
consultation and comment period.
ADDRESSES: Written comments and/or
requests to be informed of Federal
Energy Regulatory Commission (FERC)
actions concerning the rates submitted
by Western to FERC for approval should
be sent to Mr. Robert J. Harris, Regional
Manager, Upper Great Plains Region,
Western Area Power Administration,
2900 4th Avenue North, Billings, MT
59101–1266, or e-mail at
ugpfirmrate@wapa.gov. Western will
post information about the rate process
on its Web site at https://www.wapa.gov/
ugp/rates/2009firmrateadjust. Western
will post comments received via letter
and e-mail to its Web site after the close
of the comment period. Western must
receive written comments by the end of
the consultation and comment period to
ensure they are considered in Western’s
decision process.
Public information and comment
forum locations are:
1. Denver—Ramada Plaza Hotel, 10
East 120th Avenue, Northglenn, CO.
2. Sioux Falls—Holiday Inn, 100 West
8th Street, Sioux Falls, SD.
FOR FURTHER INFORMATION CONTACT: Ms.
Linda Cady-Hoffman, Rates Manager,
Upper Great Plains Region, Western
Area Power Administration, 2900 4th
Avenue North, Billings, MT 59101–
1266, telephone (406) 247–7439, e-mail
cady@wapa.gov.
SUPPLEMENTARY INFORMATION: The
proposed rates for P–SMBP—ED firm
electric and firm peaking service are
designed to recover an annual revenue
requirement that includes investment
repayment, interest, purchase power,
operation and maintenance, and other
expenses.
47945
Rate Schedules P–SED–F9 and P–
SED–FP9 for P–SMBP—ED firm electric
and firm peaking service, respectively,
were approved for a 5-year period
beginning on January 1, 2008, and
ending December 31, 2012.1 Under
current Rate Schedule P–SED–F9
effective January 1, 2008, the composite
rate is 24.49 mills per kilowatthour
(mills/kWh), the firm energy rate is
13.99 mills/kWh, and the firm capacity
rate is $5.65 per kilowattmonth
(kWmonth). The projected revenue
requirement for firm electric service is
allocated equally between capacity and
energy. Under current Rate Schedule P–
SED–FP9 effective January 1, 2008, the
firm peaking capacity rate is $5.10/
kWmonth. These Rate Schedules are
formula based, providing for an up to 2
mills/kWh increase in the Drought
Adder rate component.
This proposed rate adjustment reflects
a rate increase based on the P–SMBP—
ED Final Fiscal Year 2007 Power
Repayment Study (PRS). The PRS sets
the total annual P–SMBP—ED revenue
requirement for 2009 for firm electric
and firm peaking power service at
$282.6 million, or a 19.8 percent
increase for a composite rate of 29.34
mills/kWh. The current rates, including
a 2 mills/kWh increase provided for
under the Drought Adder formula rate
component, are not sufficient to meet
the P–SMBP—ED revenue requirements.
Given the need for a Base rate
component increase and the size of the
Drought Adder rate component increase,
Western is required to initiate a formal
public process.2 Western has prepared
rate schedules for firm electric service
(P–SED–F10) and firm peaking service
(P–SED–FP10) for consideration and
comment during this public process. A
comparison of the existing revenue
requirement and rates, and the proposed
revenue requirement and rates under P–
SED–F10 and P–SED–FP10 are listed in
Table 1.
TABLE 1—PROPOSED P–SMBP–ED FIRM ELECTRIC AND FIRM PEAKING POWER SERVICE REVENUE REQUIREMENT AND
RATES
mstockstill on PROD1PC66 with NOTICES
Firm electric service
Existing rates as of
2008
Proposed rates
(Jan. 1, 2009) 2
Firm and Firm Peaking Revenue Requirement ..........................................................
Composite Rate ..........................................................................................................
Firm Capacity Rate .....................................................................................................
$235.9 million .........
24.49 mills/kWh .....
$5.65/kWmonth ......
$282.6 million ........
29.34 mills/kWh .....
$6.80/kWmonth ......
1 WAPA–135 was approved by the Deputy
Secretary of Energy on November 14, 2007 (72 FR
¶ 64067), and confirmed and approved by FERC on
a final basis on April 14, 2008, through December
31, 2012, in Docket No. EF08–5031–000 (123 FERC
¶ 62048).
VerDate Aug<31>2005
19:03 Aug 14, 2008
Jkt 214001
2 Under the current Rate Schedules Western had
the option of increasing the Drought Adder rate
component by up to 2 mills/kWh outside of a
formal public process, and only initiating the
formal public process for the Base rate component
increase and the incremental increase of the
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
Percent
change from
existing 2008
to proposed
2009
19.8
19.8
20.4
Drought Adder rate component above 2 mills/kWh.
Instead, Western has opted to initiate the formal
public process for this rate increase.
E:\FR\FM\15AUN1.SGM
15AUN1
47946
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
TABLE 1—PROPOSED P–SMBP–ED FIRM ELECTRIC AND FIRM PEAKING POWER SERVICE REVENUE REQUIREMENT AND
RATES—Continued
Firm electric service
Existing rates as of
2008
Proposed rates
(Jan. 1, 2009) 2
Firm Energy Rate ........................................................................................................
Firm Peaking Capacity Rate .......................................................................................
Firm Peaking Energy Rate 1 .......................................................................................
13.99 mills/kWh .....
$5.10/kWmonth ......
13.99 mills/kWh .....
Percent
change from
existing 2008
to proposed
2009
16.71 mills/kWh .....
$6.20/kWmonth ......
16.71 mills/kWh .....
19.4
21.6
19.4
1 Firm
peaking energy is normally returned. This will be assessed in the event firm peaking energy is not returned.
proposed rates are subject to adjustment prior to publication in the final Notice of Order Concerning Power Rates. Adjustments, if any,
would be based on revisions to the Drought Adder rate component due to changes in hydrological conditions.
2 The
Under Rate Schedule P–SED–F10,
Western is proposing to continue to
identify its firm electric service revenue
requirement using Base and Drought
Adder rate components and provide up
to a 2 mills/kWh increase in the Drought
Adder rate component. The Base rate
component is a revenue requirement
that includes annual operation and
maintenance expenses, investment
repayment and associated interest,
normal timing power purchases, and
transmission costs. Western’s normal
timing power purchases are purchases
due to operational constraints (e.g.,
management of endangered species
habitat, water quality, navigation, etc.)
and are not associated with the current
drought.
The Drought Adder rate component is
a formula-based revenue requirement
that includes costs attributable to the
past and present drought conditions
within the Pick-Sloan Program. The
Drought Adder rate component includes
costs associated with future non-timing
purchases of additional power to firm
obligations not covered with available
system generation due to the drought,
previously incurred deficits due to
purchased power debt that resulted
from non-timing power purchases made
during this drought, and the interest
associated with the previously incurred
and future drought debt. The Drought
Adder rate component is designed to
repay Western’s drought debt within 10
years from the time the debt was
incurred, using balloon-payment
methodology. For example, the drought
debt incurred by Western in 2007 will
be repaid by 2017.
The annual revenue requirement
calculation will continue to be
summarized by the following formula:
Annual Revenue Requirement = Base
Revenue Requirement + Drought Adder
Revenue Requirement. Under this
proposal, effective January 1, 2009, the
P–SMBP–ED annual revenue
requirement equals $293.7 million and
is comprised of a Base revenue
requirement of $163.5 million plus a
Drought Adder revenue requirement of
$130.2 million. Both the Base and
Drought Adder rate components recover
portions of the firm power revenue
requirement, firm peaking power, and
associated five percent discount revenue
necessary to equal the P–SMBP–ED
revenue requirement. A comparison of
the current and proposed rate
components are listed in Table 2.
TABLE 2—SUMMARY OF P-SMBP—ED RATE COMPONENTS
Existing rates as of 2008
Base rate
component
Firm
Firm
Firm
Firm
Capacity Rate (/kWmonth) ......................................
Energy Rate (mills/kWh) ..........................................
Peaking Capacity Rate (/kWmonth) ........................
Peaking Energy Rate (mills/kWh) 1 .........................
Drought
adder rate
component
$3.65
8.93
$3.25
8.93
$2.00
5.06
$1.85
5.06
Proposed rates (effective January 1,
2009) 2
Total
$5.65
13.99
$5.10
13.99
Base rate
component
$3.80
9.27
$3.40
9.27
Drought
adder rate
component
$3.00
7.44
$2.80
7.44
Total
$6.80
16.71
$6.20
16.71
1 Firm
peaking energy is normally returned. This will be assessed in the event firm peaking energy is not returned.
proposed rates are subject to adjustment prior to publication in the final Notice of Order Concerning Power Rates. Adjustments, if any,
would be based on revisions to the Drought Adder rate component due to changes in hydrological conditions.
mstockstill on PROD1PC66 with NOTICES
2 The
As set forth in Table 2 above, under
proposed Rate Schedule P–SED–FP10,
the firm peaking capacity rate will
increase to $6.20/kWmonth, or a 21.6
percent increase for the proposed
January 1, 2009, rate adjustment.
Peaking energy is either returned to
Western or paid for in accordance with
the terms of the contract between
Western and the peaking power
customer.
Continuing to identify the firm
electric service revenue requirement
using Base and Drought Adder rate
VerDate Aug<31>2005
19:03 Aug 14, 2008
Jkt 214001
components will assist Western in the
presentation of the impacts of the
drought within the Pick-Sloan Program,
demonstrate repayment of the drought
related costs in the PRS, and allow
Western to be more responsive to
changes in drought related expenses.
Western will continue to charge and bill
its customers firm electric service rates
for energy and capacity, which are the
sum of the Base and Drought Adder rate
components.
Western reviews its firm electric
service rates annually. Western will
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
review the Base rate component after
the annual PRS is completed, generally
in the first quarter of the calendar year.
If an adjustment to the Base rate
component is necessary, Western will
initiate a public process pursuant to 10
CFR part 903 prior to making an
adjustment.
In accordance with the original
implementation of the Drought Adder
rate component, Western will continue
to review the Drought Adder rate
component each September to
determine if drought costs differ from
E:\FR\FM\15AUN1.SGM
15AUN1
mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
those projected in the PRS, and, if so,
whether an adjustment, either
incremental or decremental, to the
Drought Adder rate component is
necessary. Western will notify
customers by letter each October of the
planned incremental or decremental
adjustment and implement the
adjustment in the January billing cycle.
Although decremental adjustments to
the Drought Adder rate component will
occur as drought costs are repaid, the
adjustments cannot result in a negative
Drought Adder rate component. To give
customers advance notice, Western will
conduct a preliminary review of the
Drought Adder rate component in early
summer and notify customers by letter
of the estimated change to the Drought
Adder rate component for the following
January, with the final Drought Adder
rate component adjustment verified
with notification in the October letter to
the customers. Implementing the
Drought Adder rate component
adjustment on January 1 of each year
will help keep the drought deficits from
escalating as quickly, will lower the
interest expense due to drought deficits,
will demonstrate responsible deficit
management, and will provide prompt
drought deficit repayments.
As a part of the current and proposed
rate schedules, Western provides for a
formula-based adjustment of the
Drought Adder rate component of up to
2 mills/kWh. The 2 mills/kWh cap is
intended to place a limit on the amount
the Drought Adder formula can be
adjusted relative to associated drought
costs without having to go through a
public process to recover costs
attributable to the Drought Adder
formula rate for any one-year cycle.
During informal discussions with its
customers prior to the commencement
of this rate adjustment process, Western
discussed the possibility of
implementing a two-step rate
adjustment for the Base rate component
to address operational and maintenance
costs as well as normal inflationary
costs that would be entered into the PRS
from the FY 2010 work plans. Western
has reevaluated the benefits of a twostep rate adjustment and concluded
with the unpredictability of the
hydrological conditions, rising fuel
costs and proposed changes in the
electric transmission industry, it is more
prudent to forego a two-step rate
adjustment and continue the annual
customer consultations and possible
annual rate adjustments. Therefore,
Western is not proposing a two-step rate
adjustment in this public process.
Due to continuing below normal
hydropower generation in the P–
SMBP—ED, Western may need to use
VerDate Aug<31>2005
19:03 Aug 14, 2008
Jkt 214001
the Continuing Fund (Emergency Fund)
to pay for unanticipated purchase power
and wheeling expenses necessary to
meet its contractual obligations for the
sale and delivery of power to its
customers. Should Western use this
funding mechanism, Western will
replenish the Continuing Fund
(Emergency Fund) in accordance with
law and Western’s associated repayment
policy, dated March 15, 2007.3
Legal Authority
Since the proposed rates constitute a
major rate adjustment as defined by 10
CFR part 903, Western will hold public
information forums and public
comment forums. Western will review
all timely public comments and make
amendments or adjustments to the
proposal as appropriate. Proposed rates
will be forwarded to the Deputy
Secretary of Energy for approval on an
interim basis.
Western is establishing firm electric
service and peaking rates for P–SMBP—
ED under the Department of Energy
Organization Act (42 U.S.C. 7152); 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)); section 5 of the Flood
Control Act of 1944 (16 U.S.C. 825s);
and other acts that specifically apply to
the projects 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 Western’s
Administrator; (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 FERC.
Existing Department of Energy (DOE)
procedures for public participation in
power rate adjustments (10 CFR part
903) were published on September 18,
1985.
Availability of Information
All brochures, studies, comments,
letters, memorandums, or other
documents that Western initiates or uses
to develop the proposed rates are
available for inspection and copying at
the Upper Great Plains Regional Office,
located at 2900 4th Avenue North,
Billings, Montana. Many of these
documents and supporting information
3 Western’s Continuing Fund (Emergency Fund)
Policy can be found at https://www.wapa.gov/
powerm/pdf/repaypolicy.pdf.
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
47947
are also available on Western’s Web site
under the ‘‘2009 Firm Rate Adjustment’’
section located at https://www.wapa.gov/
ugp/rates/2009firmrateadjust.
Ratemaking Procedure Requirements
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), Western is in the process of
determining whether an environmental
assessment or an environmental impact
statement should be prepared or if this
action can be categorically excluded
from those requirements.
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: July 31, 2008.
Timothy J. Meeks,
Administrator.
[FR Doc. E8–18953 Filed 8–14–08; 8:45 am]
BILLING CODE 6450–01–P
ENVIRONMENTAL PROTECTION
AGENCY
[ER–FRL–8584–7]
Environmental Impact Statements and
Regulations; Availability of EPA
Comments
Availability of EPA comments
prepared pursuant to the Environmental
Review Process (ERP), under section
309 of the Clean Air Act and Section
102(2)(c) of the National Environmental
Policy Act as amended. Requests for
copies of EPA comments can be directed
to the Office of Federal Activities at
202–564–7146. An explanation of the
ratings assigned to draft environmental
impact statements (EISs) was published
in FR dated April 6, 2008 (73 FR 19833).
Draft EISs
EIS No. 20080164, ERP No. D–NRC–
D06005–PA, GENERIC—License
Renewal of Nuclear Plants,
Supplement 35 to NUREG–1437,
Regarding Susquehanna Steam
Electric Station, Units 1 and 2, Issuing
Nuclear Power Plant Operating
Licenses for a 20–Year Period, PA.
Summary: EPA expressed
environmental concerns about pollution
prevention issues and impacts to
E:\FR\FM\15AUN1.SGM
15AUN1
]]>Agencies
[Federal Register Volume 73, Number 159 (Friday, August 15, 2008)]
[Notices]
[Pages 47945-47947]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18953]
[[Page 47945]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Western Area Power Administration
Pick-Sloan Missouri Basin Program--Eastern Division--Rate Order
No. WAPA-140
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of Proposed Power Rates.
-----------------------------------------------------------------------
SUMMARY: The Western Area Power Administration (Western) is proposing
revised rates for Pick-Sloan Missouri Basin Program--Eastern Division
(P-SMBP--ED) firm electric and firm peaking power service. Current
rates, under Rate Schedules P-SED-F9 and P-SED-FP9, extend through
December 31, 2012, but are not sufficient to meet the P-SMBP--ED
revenue requirements. The proposed rates will provide sufficient
revenue to pay all annual costs, including interest expenses, and repay
required investments within the allowable periods. Western will prepare
and make available a brochure that provides detailed information on the
proposed rates. The proposed rates, under Rate Schedules P-SED-F10 and
P-SED-FP10, are scheduled to go into effect on January 1, 2009, and
will remain in effect through December 31, 2013, or until superseded.
Publication of this Federal Register notice begins the formal process
for the proposed rate adjustment.
DATES: The consultation and comment period begins today and will end
November 13, 2008. Western will present a detailed explanation of the
proposed rates at public information forums. Public information forum
dates are:
1. September 9, 2008, 9 a.m. to 10:30 a.m. MDT, Denver, CO.
2. September 10, 2008, 8 a.m. to 9:30 a.m. CDT, Sioux Falls, SD.
Western will accept oral and written comments at public comment
forums. Public comment forums will be held on the following dates:
1. September 9, 2008, 11:30 a.m. to 12:30 p.m. MDT, Denver, CO.
2. September 10, 2008, 10:30 a.m. to 12 p.m. CDT, Sioux Falls, SD.
Western will accept written comments any time during the
consultation and comment period.
ADDRESSES: Written comments and/or requests to be informed of Federal
Energy Regulatory Commission (FERC) actions concerning the rates
submitted by Western to FERC for approval should be sent to Mr. Robert
J. Harris, Regional Manager, Upper Great Plains Region, Western Area
Power Administration, 2900 4th Avenue North, Billings, MT 59101-1266,
or e-mail at ugpfirmrate@wapa.gov. Western will post information about
the rate process on its Web site at https://www.wapa.gov/ugp/rates/
2009firmrateadjust. Western will post comments received via letter and
e-mail to its Web site after the close of the comment period. Western
must receive written comments by the end of the consultation and
comment period to ensure they are considered in Western's decision
process.
Public information and comment forum locations are:
1. Denver--Ramada Plaza Hotel, 10 East 120th Avenue, Northglenn,
CO.
2. Sioux Falls--Holiday Inn, 100 West 8th Street, Sioux Falls, SD.
FOR FURTHER INFORMATION CONTACT: Ms. Linda Cady-Hoffman, Rates Manager,
Upper Great Plains Region, Western Area Power Administration, 2900 4th
Avenue North, Billings, MT 59101-1266, telephone (406) 247-7439, e-mail
cady@wapa.gov.
SUPPLEMENTARY INFORMATION: The proposed rates for P-SMBP--ED firm
electric and firm peaking service are designed to recover an annual
revenue requirement that includes investment repayment, interest,
purchase power, operation and maintenance, and other expenses.
Rate Schedules P-SED-F9 and P-SED-FP9 for P-SMBP--ED firm electric
and firm peaking service, respectively, were approved for a 5-year
period beginning on January 1, 2008, and ending December 31, 2012.\1\
Under current Rate Schedule P-SED-F9 effective January 1, 2008, the
composite rate is 24.49 mills per kilowatthour (mills/kWh), the firm
energy rate is 13.99 mills/kWh, and the firm capacity rate is $5.65 per
kilowattmonth (kWmonth). The projected revenue requirement for firm
electric service is allocated equally between capacity and energy.
Under current Rate Schedule P-SED-FP9 effective January 1, 2008, the
firm peaking capacity rate is $5.10/kWmonth. These Rate Schedules are
formula based, providing for an up to 2 mills/kWh increase in the
Drought Adder rate component.
---------------------------------------------------------------------------
\1\ WAPA-135 was approved by the Deputy Secretary of Energy on
November 14, 2007 (72 FR ] 64067), and confirmed and approved by
FERC on a final basis on April 14, 2008, through December 31, 2012,
in Docket No. EF08-5031-000 (123 FERC ] 62048).
---------------------------------------------------------------------------
This proposed rate adjustment reflects a rate increase based on the
P-SMBP--ED Final Fiscal Year 2007 Power Repayment Study (PRS). The PRS
sets the total annual P-SMBP--ED revenue requirement for 2009 for firm
electric and firm peaking power service at $282.6 million, or a 19.8
percent increase for a composite rate of 29.34 mills/kWh. The current
rates, including a 2 mills/kWh increase provided for under the Drought
Adder formula rate component, are not sufficient to meet the P-SMBP--ED
revenue requirements. Given the need for a Base rate component increase
and the size of the Drought Adder rate component increase, Western is
required to initiate a formal public process.\2\ Western has prepared
rate schedules for firm electric service (P-SED-F10) and firm peaking
service (P-SED-FP10) for consideration and comment during this public
process. A comparison of the existing revenue requirement and rates,
and the proposed revenue requirement and rates under P-SED-F10 and P-
SED-FP10 are listed in Table 1.
---------------------------------------------------------------------------
\2\ Under the current Rate Schedules Western had the option of
increasing the Drought Adder rate component by up to 2 mills/kWh
outside of a formal public process, and only initiating the formal
public process for the Base rate component increase and the
incremental increase of the Drought Adder rate component above 2
mills/kWh. Instead, Western has opted to initiate the formal public
process for this rate increase.
Table 1--Proposed P-SMBP-ED Firm Electric and Firm Peaking Power Service Revenue Requirement and Rates
----------------------------------------------------------------------------------------------------------------
Percent change
Proposed rates (Jan. 1, 2009) from existing
Firm electric service Existing rates as of 2008 \2\ 2008 to
proposed 2009
----------------------------------------------------------------------------------------------------------------
Firm and Firm Peaking Revenue $235.9 million............... $282.6 million............... 19.8
Requirement.
Composite Rate.................... 24.49 mills/kWh.............. 29.34 mills/kWh.............. 19.8
Firm Capacity Rate................ $5.65/kWmonth................ $6.80/kWmonth................ 20.4
[[Page 47946]]
Firm Energy Rate.................. 13.99 mills/kWh.............. 16.71 mills/kWh.............. 19.4
Firm Peaking Capacity Rate........ $5.10/kWmonth................ $6.20/kWmonth................ 21.6
Firm Peaking Energy Rate \1\...... 13.99 mills/kWh.............. 16.71 mills/kWh.............. 19.4
----------------------------------------------------------------------------------------------------------------
\1\ Firm peaking energy is normally returned. This will be assessed in the event firm peaking energy is not
returned.
\2\ The proposed rates are subject to adjustment prior to publication in the final Notice of Order Concerning
Power Rates. Adjustments, if any, would be based on revisions to the Drought Adder rate component due to
changes in hydrological conditions.
Under Rate Schedule P-SED-F10, Western is proposing to continue to
identify its firm electric service revenue requirement using Base and
Drought Adder rate components and provide up to a 2 mills/kWh increase
in the Drought Adder rate component. The Base rate component is a
revenue requirement that includes annual operation and maintenance
expenses, investment repayment and associated interest, normal timing
power purchases, and transmission costs. Western's normal timing power
purchases are purchases due to operational constraints (e.g.,
management of endangered species habitat, water quality, navigation,
etc.) and are not associated with the current drought.
The Drought Adder rate component is a formula-based revenue
requirement that includes costs attributable to the past and present
drought conditions within the Pick-Sloan Program. The Drought Adder
rate component includes costs associated with future non-timing
purchases of additional power to firm obligations not covered with
available system generation due to the drought, previously incurred
deficits due to purchased power debt that resulted from non-timing
power purchases made during this drought, and the interest associated
with the previously incurred and future drought debt. The Drought Adder
rate component is designed to repay Western's drought debt within 10
years from the time the debt was incurred, using balloon-payment
methodology. For example, the drought debt incurred by Western in 2007
will be repaid by 2017.
The annual revenue requirement calculation will continue to be
summarized by the following formula: Annual Revenue Requirement = Base
Revenue Requirement + Drought Adder Revenue Requirement. Under this
proposal, effective January 1, 2009, the P-SMBP-ED annual revenue
requirement equals $293.7 million and is comprised of a Base revenue
requirement of $163.5 million plus a Drought Adder revenue requirement
of $130.2 million. Both the Base and Drought Adder rate components
recover portions of the firm power revenue requirement, firm peaking
power, and associated five percent discount revenue necessary to equal
the P-SMBP-ED revenue requirement. A comparison of the current and
proposed rate components are listed in Table 2.
Table 2--Summary of P-SMBP--ED Rate Components
----------------------------------------------------------------------------------------------------------------
Existing rates as of 2008 Proposed rates (effective January 1,
----------------------------------------- 2009) \2\
----------------------------------------
Base rate Drought adder Total Base rate Drought adder
component rate component component rate component Total
----------------------------------------------------------------------------------------------------------------
Firm Capacity Rate (/kWmonth). $3.65 $2.00 $5.65 $3.80 $3.00 $6.80
Firm Energy Rate (mills/kWh).. 8.93 5.06 13.99 9.27 7.44 16.71
Firm Peaking Capacity Rate (/ $3.25 $1.85 $5.10 $3.40 $2.80 $6.20
kWmonth).....................
Firm Peaking Energy Rate 8.93 5.06 13.99 9.27 7.44 16.71
(mills/kWh) \1\..............
----------------------------------------------------------------------------------------------------------------
\1\ Firm peaking energy is normally returned. This will be assessed in the event firm peaking energy is not
returned.
\2\ The proposed rates are subject to adjustment prior to publication in the final Notice of Order Concerning
Power Rates. Adjustments, if any, would be based on revisions to the Drought Adder rate component due to
changes in hydrological conditions.
As set forth in Table 2 above, under proposed Rate Schedule P-SED-
FP10, the firm peaking capacity rate will increase to $6.20/kWmonth, or
a 21.6 percent increase for the proposed January 1, 2009, rate
adjustment. Peaking energy is either returned to Western or paid for in
accordance with the terms of the contract between Western and the
peaking power customer.
Continuing to identify the firm electric service revenue
requirement using Base and Drought Adder rate components will assist
Western in the presentation of the impacts of the drought within the
Pick-Sloan Program, demonstrate repayment of the drought related costs
in the PRS, and allow Western to be more responsive to changes in
drought related expenses. Western will continue to charge and bill its
customers firm electric service rates for energy and capacity, which
are the sum of the Base and Drought Adder rate components.
Western reviews its firm electric service rates annually. Western
will review the Base rate component after the annual PRS is completed,
generally in the first quarter of the calendar year. If an adjustment
to the Base rate component is necessary, Western will initiate a public
process pursuant to 10 CFR part 903 prior to making an adjustment.
In accordance with the original implementation of the Drought Adder
rate component, Western will continue to review the Drought Adder rate
component each September to determine if drought costs differ from
[[Page 47947]]
those projected in the PRS, and, if so, whether an adjustment, either
incremental or decremental, to the Drought Adder rate component is
necessary. Western will notify customers by letter each October of the
planned incremental or decremental adjustment and implement the
adjustment in the January billing cycle. Although decremental
adjustments to the Drought Adder rate component will occur as drought
costs are repaid, the adjustments cannot result in a negative Drought
Adder rate component. To give customers advance notice, Western will
conduct a preliminary review of the Drought Adder rate component in
early summer and notify customers by letter of the estimated change to
the Drought Adder rate component for the following January, with the
final Drought Adder rate component adjustment verified with
notification in the October letter to the customers. Implementing the
Drought Adder rate component adjustment on January 1 of each year will
help keep the drought deficits from escalating as quickly, will lower
the interest expense due to drought deficits, will demonstrate
responsible deficit management, and will provide prompt drought deficit
repayments.
As a part of the current and proposed rate schedules, Western
provides for a formula-based adjustment of the Drought Adder rate
component of up to 2 mills/kWh. The 2 mills/kWh cap is intended to
place a limit on the amount the Drought Adder formula can be adjusted
relative to associated drought costs without having to go through a
public process to recover costs attributable to the Drought Adder
formula rate for any one-year cycle.
During informal discussions with its customers prior to the
commencement of this rate adjustment process, Western discussed the
possibility of implementing a two-step rate adjustment for the Base
rate component to address operational and maintenance costs as well as
normal inflationary costs that would be entered into the PRS from the
FY 2010 work plans. Western has reevaluated the benefits of a two-step
rate adjustment and concluded with the unpredictability of the
hydrological conditions, rising fuel costs and proposed changes in the
electric transmission industry, it is more prudent to forego a two-step
rate adjustment and continue the annual customer consultations and
possible annual rate adjustments. Therefore, Western is not proposing a
two-step rate adjustment in this public process.
Due to continuing below normal hydropower generation in the P-
SMBP--ED, Western may need to use the Continuing Fund (Emergency Fund)
to pay for unanticipated purchase power and wheeling expenses necessary
to meet its contractual obligations for the sale and delivery of power
to its customers. Should Western use this funding mechanism, Western
will replenish the Continuing Fund (Emergency Fund) in accordance with
law and Western's associated repayment policy, dated March 15, 2007.\3\
---------------------------------------------------------------------------
\3\ Western's Continuing Fund (Emergency Fund) Policy can be
found at https://www.wapa.gov/powerm/pdf/repaypolicy.pdf.
---------------------------------------------------------------------------
Legal Authority
Since the proposed rates constitute a major rate adjustment as
defined by 10 CFR part 903, Western will hold public information forums
and public comment forums. Western will review all timely public
comments and make amendments or adjustments to the proposal as
appropriate. Proposed rates will be forwarded to the Deputy Secretary
of Energy for approval on an interim basis.
Western is establishing firm electric service and peaking rates for
P-SMBP--ED under the Department of Energy Organization Act (42 U.S.C.
7152); 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)); section 5 of the
Flood Control Act of 1944 (16 U.S.C. 825s); and other acts that
specifically apply to the projects 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 Western's Administrator; (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 FERC. Existing Department of Energy (DOE)
procedures for public participation in power rate adjustments (10 CFR
part 903) were published on September 18, 1985.
Availability of Information
All brochures, studies, comments, letters, memorandums, or other
documents that Western initiates or uses to develop the proposed rates
are available for inspection and copying at the Upper Great Plains
Regional Office, located at 2900 4th Avenue North, Billings, Montana.
Many of these documents and supporting information are also available
on Western's Web site under the ``2009 Firm Rate Adjustment'' section
located at https://www.wapa.gov/ugp/rates/2009firmrateadjust.
Ratemaking Procedure Requirements
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), Western is in the process of determining whether an
environmental assessment or an environmental impact statement should be
prepared or if this action can be categorically excluded from those
requirements.
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: July 31, 2008.
Timothy J. Meeks,
Administrator.
[FR Doc. E8-18953 Filed 8-14-08; 8:45 am]
BILLING CODE 6450-01-P
